The World's First Crypto Market Index

[ShilpaMitra]

The preface: The traditional stock market has Dow Jones Index to monitor the market health but we noticed that our own crypto world doesn’t have something like that. People generally use Bitcoin’s price as market health indicator, whereas more than 50% market is dominated by altcoins. Hence we have developed a market index which takes into account the top 100 coins(based on market capitalization) and gives index points which indicates the market health.

The execution: We have used price-weighted method, the same method that is used to calculate Dow Jones Index. The divisor gets adjusted whenever a member(or constituent) i.e a coin or a token gets changed in the top 100 coins list. It means simply because a new constituent is getting added, this should not justify high value variations in the index. Hence just before the new constituent is introduced, a new “calculated” divisor value should be introduced and we just did that. This is very important because the list of top 100 coins keeps changing very frequently so our algorithm should be self-adjusting. The value of the index is calculated every 5 minutes and always done so taking into account the realtime top 100 highest marketCap coins.

The ADD-ON: A free embeddable website widget! Be among the first few to try it out! The Funfact: From now on you don’t have to follow every coins’ price changes to judge whether the overall market is bullish or bearish, rather just follow SCMS Index. We hope this would become the benchmark for crypto market analysis in the coming years!

How it is calculated?

Suppose Price of  
Coin A = $10  
Coin B = $20  
Coin C = $30  
So initially the index would be = (10+20+30)/3 = 20(correct index). After 6 hours the price of B becomes $5.  Now our index is = (10+5+30)/3 = 15(correct index). It reflects the market health correctly as it shows the market is down.  
Now after 6 more hours, Coin B loses it’s MarketCap and as a result it is out of the top 3 list and is replaced by coin D with $40 price.  
So now the index is = (10+40+30)/3 =26.67(wrong index). Our index should not increase just because a new constituent(coin) got added to the list as it does not reflect the correct market health.  So, we would adjust the divisor.
Now the new divisor would be (New price summation/last known correct index) = (10+40+30)/15=5.34  
The adjusted divisor = 5.34.  
Hence the new correct index would be = (10+40+30)/5.34 = 15(see just the inclusion of new coin didn’t change our index which means our index value is correct).  Our algorithm automatically adjusts the divisor whenever there occurs a change in the top 100 coin list! We take the price of top 100 coins based on MarketCap for our index calculation.

The Link: https://www.shufflup.org/SMSI.php

Yesterday we got featured in Product Hunt you can check us out there as well : https://www.producthunt.com/posts/shufflup-crypto-market-sentiment-index

Any feedbacks/suggestions would be highly appreciated and always welcome.

https://i.imgur.com/gxvgWxB.png

[tbalazs]

Maybe I misunderstood something but by a simple google search on crypto index I found at least 10 indexes already working.

[LuanX3]

So basically you are creating a chart for the overall health of the totality of the whole cryptocurrency world/market. It is ambitious, but it will likely be a hard thing to do. Unlike Dow Jones Index, they are just given a constant set of companies which are listed on their chart to monitor. The number and participants don't really change a whole lot unless some get listed and de-listed. This is not true in the cryptocurrency sphere. New crypto is added daily, and a lot fall out of favor as well. So your list might not be the same every day or even every hour. As some crypto will be relevant today and probably not later, and vice versa. That is something to be cautious about.

[tbalazs]

It is actually under dev already here:https://www.bitguru.co.uk/27622-2/

Coinbase Index Fund Will Be the Dow for Cryptocurrencies

Coinbase is acting swiftly, taking strategic actions that will grow its brand and larger presence in the marketplace. The widely adopted cryptocurrency exchange and wallet provider, Coinbase is in the process of launching the Coinbase Index fund which will be the Dow for cryptocurrencies....

[ShilpaMitra]

So basically you are creating a chart for the overall health of the totality of the whole cryptocurrency world/market. It is ambitious, but it will likely be a hard thing to do. Unlike Dow Jones Index, they are just given a constant set of companies which are listed on their chart to monitor. The number and participants don't really change a whole lot unless some get listed and de-listed. This is not true in the cryptocurrency sphere. New crypto is added daily, and a lot fall out of favor as well. So your list might not be the same every day or even every hour. As some crypto will be relevant today and probably not later, and vice versa. That is something to be cautious about.

Hi LuanX3,

Thanks for mentioning the point but we have already got it covered. Our algorithm auto adjusts the divisor whenever a currency gets added to the everchanging list of top 100 crypto-currencies. The index always shows the market health correctly. I have included a detailed calculation with the main post to show how we handle the issue of new crypto getting added or removed from the top 100.

If you have any other question please feel free to ask me. Thank you.

[ShilpaMitra]

It is actually under dev already here:https://www.bitguru.co.uk/27622-2/

Coinbase Index Fund Will Be the Dow for Cryptocurrencies

Coinbase is acting swiftly, taking strategic actions that will grow its brand and larger presence in the marketplace. The widely adopted cryptocurrency exchange and wallet provider, Coinbase is in the process of launching the Coinbase Index fund which will be the Dow for cryptocurrencies....

Thanks for your reply.

The Coinbase index will only cover the assets listed on their exchange(GDAX) and that leaves out many credible cryptocurrencies and only includes a few cryptocurrencies like BTC, BCH, LTC, ETH. So, that nowhere comes closer to measure the whole market sentiment! Also, Coinbase is creating it so that a few credible investors can invest in the crypto market as a whole, but we have created this index for all traders who want to understand whether the market is going upward or downward.

So,in any case we are ahead of the game! They are in the developement mode and we have already launched! 

I hope I was clear in my explanation, if you have any further questions please feel free to ask me.

[VirtusPay]

Great service!

Please add Virtus to your service
https://bitcointalk.org/index.php?topic=2983251

Thanks!