You don’t want to jump into your strategy blind.
Since the cryptocurrency market is top heavy, taking a square root of market capitalization shifts some of the weightings from the highest capped coins towards the lower-capped coins. Square root market capitalization weighting -The square root weighting strategy has a similar function to maximum percentage caps. The percentage of any individual coin is the coin’s market capitalization value divided by the total market capitalization value of all the coins in the portfolio. Market capitalization weighting -Coins with larger market capitalizations are weighted more heavily. Once you’ve selected the # of coins to include and determined your percentage caps, it’s time to select a weighting strategy.Įvenly weighted - Every coin in the portfolio has equal weighting. Anything above a maximum cap gets redistributed to all the coins below by weighted market capitalization until the entire sum of the portfolio adds up to 100%.Ĭonversely, a minimum cap specifies the smallest percentage of any coin you can have in your portfolio. One way to do this is by using percentage caps.Ī maximum cap denotes the maximum percentage any coin can be in your portfolio. Since the cryptocurrency market is very top-heavy, the top 3 coins make up 80% of the market capitalization, you may want to give lower ranked coins a higher weighting. The maximum % of any coin in the portfolio is 10%
You can also create mid-cap and small-cap indices with different configurations e.g. The first step involves selecting the # of coins that will go into your portfolio.įor example, ranks 1–20 capture the top 20 coins by market cap. Choose the # of Coins in Your Portfolio & Set Percentage Caps So today, we’re launching a new feature that lets anyone create their own cryptocurrency index. While it was well-received, many of our users want to customize and give it their own flair. In March 2018, we launched the HODL20, an index comprised of the top 20 coins by market capitalization. That’s why our investment philosophy is centred around passive indexing. We don’t know who the winners will be, but we are confident that the price & value of the asset class will increase in the long-run. Join 10,000+ cryptocurrency investors who are using HodlBot to automatically manage their portfolio.Īt HodlBot, we’re giving non-accredited investors an easy and inexpensive way to invest across the entire cryptocurrency market.
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