Crypto - developing a price index

Before drilling down into comparing the two simple strategies, I want to divide the data in segments by price growth rates. I’m interested in seeing how the two strategies compare during periods of slow movement, rapid growth, and rapid decline. To pick the periods I wanted to use an index made up of several coins. There are multiple indices out there, some based on market cap and some on sales. I wanted one that also had downloadable daily history files. After looking at these, I decided to build my own. Remember, initially these are only going to be used for assessing growth periods.

I elected to start by using total daily sales in USD. This only represents a portion of the total exchanged in all currencies. But for my purposes, this is adequate. I also wanted to be able to limit the period spanned (for future use). I wrote a program that reads the data from the downloaded Yahoo daily price spreadsheets and did the calculations necessary to sum all the USD volumes, then divided the USD volumes for each coin by the total. I did this for the top 20 coins for the four quarters ending with the first quarter of 2018. Not surprisingly, bitcoin ended up being weighted at 49%. Following are the top 8 coins which represent 90% of the total USD volume.

Coin	Index	Cum Index
BTC	0.4904	0.4904
ETH	0.1653	0.6556
LTC	0.0724	0.728
BCH	0.0689	0.797
XRP	0.0553	0.8522
IOT	0.0207	0.8729
EOS	0.0186	0.8915
NEO	0.0151	0.9066

Applying these, I generated the following closing price index graph.

I’ll be able to select the time periods I want to focus on to compare the two simple strategies. I’ll have these results in my next post. Follow me at @ole44bill on Twitter to know when this occurs.