New Marketcap and Crypto Indexes for Cryptoforecast users

The continuous research of high quality market data remains a constant issue for every user. This is not a surprise. A market that includes more than 1500 coins on an enormous number of different exchanges is very hard to monitor and pose some really hard challenges to investors.
As a global analysis tool for the individual cryptocurrencies clusters, we would like to help solving this problem by introducing crypto market indexes that can be consulted by the platform or generated in real-time by the individual trader. The new webapp will also include an internal marketcap of the first 10–25–50–100 coin based on their marketcap and corrected with volumes. We will also show the volume share of each coin in this marketcap and many other useful informations. Also, there will be some index that will allow to monitor the market trend of top 10–25–50–100. Of course, it will also be possible to choose whether to consult the instantaneous value or to view the historical trend of the index and of the marketcap.

But how will volumes correction work?
Let’s imagine, for example, a top 100 index will list top 100 crypto for market capitalization. We want an index that is really representative of the market situation, so we will exclude coins with high market cap but very low volumes. Let’s take for example this top 100 coin index. We will act as follow: we will take the lowest 5market cap coins and we will calculate their average daily volume. Then, we will exclude coins under this minimum volume floor. This will make this index more representative of the market situation putting under users attention only coins that have a real market and whose valuations are not biased by a too low liquid market cap. Of course, in confront with other market, crypto market is a low-liquid market, with great market moves pushed by low volumes, so this is a collective problem.

It is remarkable to point out that for volume we will use cryptocompare’s figures, not those provided by coinmarketcap. Why? Because if there is an Altcoin/Altcoin, BTC/Altcoin or BTC/USDT pair, coinmarketcap will double the volumes. How? For example, imagine that we have a daily volume of about 165 million dollars on BTC/USDT pairs on Binance. Coinmarketcap will take in account 165 million dollar volumes for BTC and 165 million dollar volumes for USDT. So, total volumes will be 165+165 =330 million dollar. This is a great problem for example for BTC/altcoin pairs, because it increases both BTC and Altcoin volumes. By this way, there is a great misunderstanding of altcoin and bitcoin volumes. While we have to admit that this situation is in part logical, because BTC/LTC pairs can be seen as both volumes of BTC and LTC, we believe that this can lead to a misunderstanding view of total volumes.

So in a first phase we will use cryptocompare data, that takes on account this particular effect. In a second phase, we will directly take data from exchanges.

Also, there have been some periods in which bitcoin market dominance was over 50–60% of the whole market. While these scenarios seem far long from now, we have to take some precautions to ensure that our index won’t passively follow the coin, but will show a real aggregation of multiple coins. So, we will act as follows: we will use a 50% bottom-strategy on our index. What does it mean? That if bigger coin is over 50% of the market, it will be reduced to 50%. So, for example, if BTC spikes to 60% of total market cap, our index will strip 60–50 = 10% of total market cap from bitcoin ad redistribute this market cap in proportion to other coins. By this way, as we previously said, the index won’t passively follow the bigger coin but will greatly represent all the market.

But with these methodologies, developed by our team, we will be sure to reduce this bias and provide a more reliable representation of the market.

Moreover, in a second development phase, the platform will give to our users the possibility to create personalized indexes used to monitor and analyze the aggregation of coins that they are interested in. The personalized indexes will be calculated through the following weighted average: 𝐼(𝑡) = ∑𝑤𝑖 ⋅ 𝑝𝑖 (𝑡) 𝑛 𝑖=0 𝑜𝑟 𝐼(𝑡) = ∑𝑤𝑖 ⋅ 𝑝𝑖 (𝑡) ⋅ 𝑣𝑖 (𝑡) 𝑛 𝑖=0 Where:
𝐼(𝑡) — is the value of the index at the desired time
𝑤𝑖 –is the value of the weight that is given to the price of the single currency
𝑝𝑖 — is the price of the single currency
𝑣𝑖 (𝑡) — is the volume of the single

In addition to this, there will be the possibility to create a marketcap built on coinmap aggregations. So, for example, you want to see a personalized coinmarketcap that includes digital cash only? Or you are a software engineer that, for its skills, wants to analyze only crypto that are focused on digital infrastructures and decentralized apps? You can do it. Remember that Cryptoforecast all is a single project, and we want to create the biggest integration among its tools. This will be a great step in this direction.
Another step will be, if you build an index of coin with a reliable dataset (for example a index of Bitcoin, Litecoin, Ethereum), applying on this index our forecasting algorithms. We are working on these very promising integration.

By this way, cryptoforecast will give a complete and adjusted view of all the market. A market that is very hard to clearly see, but needs to be shown in its essential feature for allow investors to improve their trading and investment strategies. Cryptoforecast is working on this, and crypto-indexes and market cap will be a great step to new milestones, not only for us but also for our users that will have a better view of all the market and will share the power of our analysis tools. The power of better understanding the most unpredictable market all over the world.