In the conditions of a falling market, ICU indices let clients mitigate the effect of the cryptocurrency slump.
According to the ICU report for summer 2018, Flash Banking was the most profitable index for cryptoasset owners. It includes the assets of projects providing blockchain solutions in the financial services sector: Ripple, Stellar, NEM and OmiseGo.
ICU co-founder Vladimir Zarechnev says:
“Amid negative news about Ethereum, almost the entire altcoin market came under pressure. Among blockchains with high capitalization, banking sector assets remain the least dependent on the price of ether.”
Recall that from early June to late August, Ethereum lost more than 50% of its value, falling from $580 to just over $280. Compared to the beginning of 2018, the fall is more than 61% in 8 months.
Thus, a hypothetical investor who had $1000 in ether in early summer 2018 would at the end of the summer have retained only $486 of the initial investment. The same $1000 invested in ICU’s Flash Banking index only declined to $610.
This suggests that indices can reduce the risks of individual altcoins. Constant updating and rebalancing of the index bring even better results. If we compare Flash Banking with the general altcoin market, it allowed investors save 22% more asset value.
“Four of the five indices currently supported at ICU have produced better results than the altcoin market average. The fact that all three indices containing ether produced the best results demonstrates the positive effect of proper allocation of funds. With such a rapid decline in market prices, any cryptocurrency, even large cryptocurrencies, can be pressured, not to mention the less capitalized ones. Indices are the easiest way to survive a correction.”
Other ICU indices containing ether yielded a 2-3% better result than ether, and a 1-2% better result than the altcoin market as a whole. For example, the Smarter Money Index has retained 52% of the initial value.
ICU is a service that offers indices, i.e. automatically selected cryptoassets. They have been developed by the project’s experts based on well-known theories of asset composition and diversification. The indices are designed as a universal tool for both falling and rising markets.
ICU updates the indices based on regular market analysis. The weight of each component in the indices is adjusted at certain intervals automatically.