According to the operator of the world’s fifth-biggest trading platform, the new indexes will give cryptocurrency investors a better understanding of today’s market trends.
Upbit, the largest cryptocurrency exchange in South Korea, is going to launch the country’s first domestic digital currency index called UBCI (Upbit Crypto Index). According to a report by Business Korea, the new cryptocurrency index will make it easier for traders to analyze current trends within the market.
The company operating Upbit, Dunamu, said the index will measure market conditions based on long-term transactional data by suggesting a standard on coin quotes. Also, the company is in plans to enlarge its business so that UBCI can be used overseas, beyond the Korean market.
Upbit is currently a leading exchange within the domestic market as well as the global market in terms of trading volume, processing more than $700 million per day. Dunamu launched the platform in October 2017 after a partnership with the US-based cryptocurrency exchange Bittrex. At the time, it became the first Korean exchange to enable traders invest in a wide variety of coins.
Just few months since its launch, Upbit became the country’s main cryptocurrency trading operator, now accounting for more than half of the domestic trading market. According to a report published by a national party last month, the company accounted for 52.9% of the national market.
The new index will be measured by gathering trade data from Upbit and using it to develop a standard value in confidence intervals. The four indexes created include: the Market index, the Sector index, the Strategy Index and the Bitcoin Index. The Sector, Market, and Bitcoin indexes are scheduled to be launched in April, while the Strategy Index will be opened later this year.
To conduct calculations, all four indexes will use different set of metrics. The Market Index is a market cap-weighted index that analyzes the market’s total liquidity ratio to allow investors monitor all digital currencies at a glance. The Bitcoin Index will use bitcoin trading data, while the Sector Index will classify the characteristic of each sector of digital coins. The Strategy Index functions as an indicator for developing a quantitative investment rules and monitoring the yields of investors’ portfolios.
“The present situation of the cryptocurrency market is quite similar to the traditional financial market based on stocks and bonds in its early stage. Accordingly, as the market gets more sophisticated, the UBCI is expected to play an important role in this area in the future,” said Lee Seok-woo, the president of Dunamu, highlighting the need for new indexes. “We will also disclose the index rulebook and let the market evaluate it before long.”