Crypto 10 Index – What is It and How to Invest?

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This work has provided useful insights toward understanding the meaning of the crypto 10 Index. We have further provided some guides on how to invest in the Crypto 10 Index. Further recommendations on the brokers offering this indices pair have been treated in this work.

Introduction

Many traders today have been attracted to the crypto 10 Index. One major reason why it has become the traders’ favorite is that it has the lowest volatility among other indices pairs. Others consider it a handy indicator that tracks the general crypto market sentiment and direction of the cryptocurrency market. This has made a lot of new traders all the more curious to learn about the crypto 10 Index and how to invest in it. Well for this latter category, you will find this article an invaluable guide to satisfy your curiosity.

What is crypto 10 Index

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The Crypto 10 Index is a crypto indices pair offered in the market today which tracks the performance of the top 10 biggest cryptocurrencies based on their market capitalization. The Crypto 10 index is today used as a yardstick for measuring the performance of the Crypto market at large by investors who seek to determine the market trend. Since the crypto 10 Index covers only the top 10 performing cryptocurrencies by market capitalization, it therefore suggests that, the list of the pairs making up these indices is not fixed but always updated based on the leading cryptocurrency by market capitalization. From the creation of this pair till the present moment, only Bitcoin and Ethereum had remained in the list of the top three without cease. Others at some point have prevaricated. We will consider in a different section in this work the factors that determine the cryptocurrency that is added and retained on the list of the crypto 10 Index.

Why is the Crypto 10 Index often used in monitoring the strength of the crypto market?

The crypto 10 Index is today used to track the performance of the crypto market at large based on the fact that there exists a sort of market dominance by the top Cryptocurrencies today. For instance, we talk of Bitcoin dominance followed by Ethereum and the rest based on the fact that they have the largest capital investment and are often the most trusted crypto assets by investors. Hence, they set the pace for other Cryptocurrencies to follow. An inflow into the market capital of  Bitcoin allows other cryptocurrencies to rise too and vice versa.

When was the Crypto 10 Index created?

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The Crypto 10 Index was first created in December 2016 by Crypto Finance AG brokerage company with a market price of $1000 assigned to it. However, It was further taken up and calculated by Bita Company in 2018 who named it  BITA10 Index after the company’s name as their unique brand. Today many more brokers are offering this product to clients as one of the financial instruments to trade in the market.

What is the method used in selecting the coins that make up the Crypto 10 Index?

Generally for a coin to be listed among the crypto 10 Index, it must be traded on at least two major exchanges for four months, and have satisfied the regulatory requirements. Other factors considered are as follows:

Market capitalization: Before any coin would be added to the list of the crypto 10 Index, it must maintain an average market capitalization of at least 1 billion dollars for a consecutive period of 30 days. The market capitalization of the coins that make up the crypto 10 Index is calculated in dollars.

Trading Volume: For a coin to be added to the list of the crypto 10 Index, it needs to create a record of a daily trading volume of at least 5 million dollars consecutively for 30 days.

Above all, the list of coins traded on the crypto 10 Index is updated after every 48hrs trading session. Any coin in the list that falls below the thirteenth position is replaced with the next coin that satisfies these requirements.

List of coins that make up the crypto 10 Index

Source: insidehook.com
  • Ethereum
  • Bitcoin
  • Binance
  • Cardano
  • Dogecoin
  • Polkadot
  • Uniswap
  • Litecoin
  • Chainlink
  • Bitcoin Cash

How to Invest in Crypto 10 Index

Investing in the crypto 10 Index is quite different from investing in other Cryptocurrencies. This is because while it is possible to own any  Cryptocurrency as a digital asset in spot trading, it is not possible to own the crypto 10 Index as a digital asset. The reason for this is that the Crypto 10 Index is only a derivative and cannot be minted. Its value is largely dependent on the performance of the top ten Cryptocurrencies by market capitalization. To this end, one can only invest in the Crypto 10 Index as CFD.

Investing in Crypto 10 Index as CFD

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The term CFD is an acronym that represents ‘Contract for Difference’. Investing in the Crypto 10 Index as CFD – offers the trader the opportunity to speculate on the upward and downward movement of the crypto 10 Index and make profits by making the right predictions. In this case, the trader can profit from the different market movements either as a scalper, day trader, or swing trader. The profit made by the investor is determined by calculating the price difference in the crypto 10 Index from his entry point to his exit position. The total variation in the market price within this period is immediately calculated as a percentage of the volume traded and offered to the investor as his profit/loss.

Other ways to invest in Crypto 10 Index as CFDs

There are two other ways to trade Crypto 10 Index as CFD. They are discussed below:

Futures: Future trading is a derivative form of trading that allows traders to speculate on the expected future market prices of the crypto 10 Index and make decisions from it to either go long or short the market. Futures are leveraged trading offering the investor a greater opportunity to make money by magnifying his capital with high leverage.

Margin trading: Margin trading is very similar to future trading. This form of trading allows one to use higher leverage than is possible in future trading. With margin trading, the trader can either long or short the market based on the market trend.

You can read more about How to trade crypto 10 Index here.

How to Invest in Crypto 10 Index: A step-by-step guide

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For such investors who have never traded on an exchange or with different brokers in the past, we have further provided a handy guide on how to begin this journey today. The procedures are highlighted below:

Choose your preferred broker: The first step the investor needs to take is to decide which broker to trade with. We have provided a long list of brokers offering the crypto 10 Index to assist the trader in making his decisions easily.

Complete your account verification: Often brokers require their investors to complete an identity verification process known as KYC. The investor is here required to upload any of his identity documents and proof of address for record purposes.  Once this is completed, the broker grants him the freedom to use their platforms without limitations.

Fund your account: After the verification process is completed, the investor can proceed to use any of the deposit methods provided by the broker to fund his account. Some brokers place their minimum deposit as $100 while others could make it higher. It is for the investor to decide which broker is best for him to choose.

Place your order: After the funds have been deposited into the investors’ account, then he can proceed to the broker’s trading platform such as MT4 or MT5 or any other trading app provided by the broker to place his order. He will need to search for the crypto 10 Index among the list of the index pairs provided by the broker.

Key differences between Crypto 10 Index and other cryptocurrencies include:

Source: bankrate.com

Ownership of digital assets: There is no real ownership of assets while trading the crypto 10 Index.  This is quite different from other Cryptocurrency trading where there is real ownership of assets traded as spot.

Minting: While other Cryptocurrencies could be minted and burnt, it is not possible to do so for the crypto 10 Index.

Derivative: Other cryptocurrencies are known to have real digital existence. This is quite different for the crypto 10 Index as its value and market price are derived from the component top 10 Cryptocurrencies.

Factors to consider while choosing a broker for trading the crypto 10 Index

Regulation: It is very necessary to choose only those brokers that are registered with the financial authority existing in the countries where they operate.

Customer Support Service: A good broker is expected to have an efficient customer support service to assist their clients in resolving any issues they encounter at any point in time.

Years of experience: It is highly recommended to choose from the list of those brokers with at least three years of experience in the industry and who have kept an excellent record from their creation.

Methods of deposit and withdrawals: Brokers must provide multiple options for deposits and withdrawals to suit the needs of their clients across the country. Brokers that satisfy this demand are highly recommended for trading.