Sofiko is a freelance fintech copywriter at Coinspeaker. With a Bachelor degree in International Business and Economics, Sofiko has been deepening her knowledge of an agile innovative industry primary focusing on the robust blockchain technology and cryptocurrencies. As a bank employee, Sofiko particularly keens on crypto and blockchain integration into the established banking systems.
Huobi Pro has announced the launch of its new crypto market index, which will track ten different assets trading against U.S. Dollar Tether (USDT).
The growing cryptocurrency exchange Huobi are obviously on an expansion drive, as following the recent announcement of hiring the OKEx’s ex-CEO, once again it makes headlines, thus now the company has developed a series of initiatives to expand its offerings. Today Huobi Group officially releases its newly developed ‘Huobi 10 Index’, and in addition, next month the company is looking to launch another financial product based on the Huobi 10 Index, named ‘HB10’.
The Huobi ‘main force’ index, which is intended to reflect the overall performance of Huobi Pro market, will track ten different digital assets traded against Tether dollars (USDT) in real time. Hence, ‘Huobi 10 Index’ will provide investors with a sharper snapshot of specific segments of the market, as well as funds a benchmark to compare against it. This makes the process of cryptocurrency market analysis less time-consuming, as investors will be able to see a single aggregated feed rather than having to check on individual assets one at a time.
The Huobi 10 Index runs on the simple but efficient weighting methodology that utilizes advanced financial engineering such as asset classification and weighted average of trading volume analysis to create a digital asset index fit for financial products to compare with.
Taking into account key factors of digital assets, such as price, liquidity and other factors, it has divided the assets into four main categories: digital asset, platform and application tokens. Then the number of constituents in these four categories is being ranked according to their turnover, and top assets of each category will be selected as index samples. After samples are selected, the sample weight will be calculated based on the daily average trading volume of the previous quarter.
Huobi also has a contingency in place in case an asset is delisted. The press release states that when an unexpected delisting of the index component occurs, the sample is temporarily replaced. And the coins that are ranked first in the candidate list will be selected as the sample coins in turn.
The high performance of Huobi 10 Index has been proved on scoring against Bitcoin. According to the historical data from March to May, the Alpha of Huobi 10 Index compared to BTC is -0.0028, while the beta of the index based on BTC is 0.79. This proves that Huobi 10 Index is effective in maintaining alpha while suppressing volatility.
In the pipelines, there are big plans set for the Huobi 10 Index. According to the company’s official statement, launched with a base of 1,000 points, the Huobi 10 Index will be soon published in global financial communications agencies such as Bloomberg and S&P.
The exchange further plans to launch index-based products with its main force index as the tracking target at Huobi Pro. Working towards the timeline of June 2018, Huobi Group is looking to introduce another financial product, named ‘HB10’ that is going to be backed by the Huobi 10 Index. The company’s future financial derivatives are planned to be released based on Huobi 10 Index as well.
Over the past several months, Huobi has been seen to expand its operations, including its April announcement that it will be opening offices in London. Yet the launch of its own financial index serves as an explicit example of company’s commitment and determination to achieve mainstream market adoption.