When speaking of trading, normally those who are alien to this world think of the purchase-sale of shares. However, the financial market is full of products where you can invest. From stocks and bonds, through coins and cryptocurrencies, until you get to future contracts and of course indices, such as the volatility index, crypto or crypto 10 which we will talk about today.
Indices inside and outside of the crypto world
If we are interested, so be it mildly, to inform us about what is happening in the world. It is likely that terms such as the “S&P 500 index” or “Dow Jones index”, have crept into our vocabulary. As a way to refer to what is happening on the New York stock exchange, and in general in the american financial markets. But, What is an index? In simple terms, an index is a financial product that measures the performance of a set of assets. Therefore, you can invest in an index as if invirtieras in a company, and when you do, your money is distributed among all the assets that make up that index. Whether it’s the 500 companies on the list of S&P, or a group of cryptocurrencies, as with the index Crypto 10. By varying the value of your investment according to the behavior of that group of assets, according to set criteria. Therefore, the indexes end up serving a dual function within the economy. In the first place, serve as an indicator of the state of a sector of the market, showing in general the same is having a positive behavior or negative. And in the second place, to serve as an investment vehicle, for traders can minimize risk and obtain gains from the performance of a basket of assets.
The volatility index, crypto
Thus, it is clear that investment in stock market indices may prove to be a clever move. Especially when it comes to the crypto market, where in most cases, the largest gains are for those who decide to take advantage of financial products such as futures contracts, contracts for difference or indexes. What makes the volatility index, crypto or index crypto 10, one of the main options for investing in the market. Having been created to measure the performance of the top 10 cryptocurrencies by its market capitalization, including within if the price of Bitcoin, Bitcoin Cash, Ethereum, Ripple, EOS, Litecoin, Monero, Cardano, IOTA and Dash. The same was designed by BITA, a firm with headquarters in Germany, we also established the way in which it would distribute the weight of each criptomoneda within the financial product. With the Bitcoin and Ethereum defining 50% of the value of the index, and the rest of the criptoactivos to divide the remaining 50%, as indicated by the following graph: the value of The volatility index, crypto is distributed between the cryptocurrencies that shape it In this way, the stability of the volatility index is dependent on several cryptocurrencies at the same time. Minimizing the possibility of loss acute for those traders who decide to invest their capital in the same, to distribute the risk between all these criptoactivos, instead of concentrating it in one. Being the investment in this index, in addition, a process extremely simple thanks to the facilities offered by Plus500, one of the main brokers of the crypto market. And with which you can invest in this index quickly and safely, as I will explain in our next article dedicated to the Crypto 10.