Crypto Index Tracker: New Expanded Indices Show Continued Metaverse Outperformance
- By Bilal Hafeez and Dalvir Mandara
- 2 min read
Our crypto indices have been popular amongst investors and so we are constantly looking for ways to improve them. We’ve therefore decided to make a number of improvements. First, we expand the number of coins in each index from five to ten. This should give a better overall measure of how well each class of coins are performing. Second, we’ve changed the index calculation methodology to a more tradeable monthly rebalancing rather than daily.
This article is only available to Macro Hive subscribers. Sign-up to receive world-class macro analysis with a daily curated newsletter, podcast, original content from award-winning researchers, cross market strategy, equity insights, trade ideas, crypto flow frameworks, academic paper summaries, explanation and analysis of market-moving events, community investor chat room, and more.
Our crypto indices have been popular amongst investors and so we are constantly looking for ways to improve them. We’ve therefore decided to make a number of improvements. First, we expand the number of coins in each index from five to ten. This should give a better overall measure of how well each class of coins are performing. Second, we’ve changed the index calculation methodology to a more tradeable monthly rebalancing rather than daily. We retain equal weighting to prevent one coin dominating each index. We’ll release a more detailed write-up on the how we decided on the coins and the broader revisions in the coming weeks.
As for the recent performance of the indices, we continue to find our Metaverse Index outperforming with an impressive 27% gain over the past week (Charts 1 and 2). Bitcoin, our Smart Contract Index and our DeFi Index had similar weekly performances of around 15%. In terms of the breakdown within each index:
- Smart Contract Platform Index. VeChain (VET) is up the most at 25% on the week, while Chainlink (LINK) is up the least at 9%. Meanwhile, Ethereum is up 17% on the week.
- DeFi Index. Compound (COMP) is up the most at 22%, while Uniswap (UNI) and Maker (MKR) are up the least at 5% each.
- Metaverse Index. Gala (GALA) is up the most at a staggering 76%, while Aavegotchi (GHST) is up the least at 3%.
- Bitcoin. This is up 14% on the week.
What Are In The Four Indices?
Here are the indices in more detail:
- Bitcoin: the OG of crypto markets deserves its own category and is in many ways the true benchmark for any other crypto market.
- Smart contract platforms: after bitcoin, the big innovation was to have blockchains that were more programmable. These could host smart contracts or decentralised applications and have allowed the emergence of the metaverse and defi. Ethereum (ETH) is the most popular version of a smart contract platform. As well as ethereum, we also include some key competitors. The constituents of this index are: Ethereum (ETH), Cardano (ADA), Avalanche (AVAX), Solana (SOL), Fantom (FTM), VeChain (VET), Terra (LUNA), EOS (EOS), and Chainlink (LINK). We also include Polkadot (DOT) which allows interoperability between blockchains and the use of smart contracts via parachains.
- Metaverse: coins associated with the creation of a virtual space/digital world on the internet using a combination of augmented reality, virtual reality, and social networks. The constituents of this index are: Axie Infinity (AXS), The Sandbox (SAND), Decentraland (MANA), Enjin Coin (ENJ), Aavegotchi (GHST), Terra Virtua Kolect (TVK), Ultra (UOS), Phantasma (SOUL), RedFOX Labs (RFOX), and Gala (GALA).
- Decentralised Finance (DeFi): financial services built on top of blockchain networks with no central intermediaries. This can be a very broad category, so we narrow this down to platforms that focus on lending/borrowing, yield farming, automated market making and decentralised exchange tokens. The constituents of this index are: Aave (AAVE), Compound (COMP), Uniswap (UNI), Yearn.finance (YFI), Loopring (LRC), PancakeSwap (CAKE), Maker (MKR), 1inch (1INCH), Thorchain (RUNE), and Terra (LUNA).
Dalvir Mandara is a Quantitative Researcher at Macro Hive. Dalvir has a BSc Mathematics and Computer Science and an MSc Mathematical Finance both from the University of Birmingham. His areas of interest are in the applications of machine learning, deep learning and alternative data for predictive modelling of financial markets.
Bilal Hafeez is the CEO and Editor of Macro Hive. He spent over twenty years doing research at big banks – JPMorgan, Deutsche Bank, and Nomura, where he had various “Global Head” roles and did FX, rates and cross-markets research.