Upbit, South Korea’s second largest crypto exchange, is planning to launch a new cryptocurrency index called UBCI (Upbit Crypto Index). The concept is to provide a standard index which can measure market conditions by suggesting and creating a coin quote standard.
In a report by Business Korea this morning, it was noted that the company operating Upbit, Dunamu, aims to provide this index in order to make it easier for investors to understand overall market trends and the bigger picture.
Branching Out
In addition to the new cryptocurrency index, the company also plans to expand the business so that the index can be used on international markets. There is often a discrepancy between cryptocurrency prices on domestic and international markets due to local demand. South Korea is a dominant player in crypto trading and what happens there often has wider implications across the rest of the world.
The new index will function by collecting long term transaction and trade data from the exchange and using it to create a standard value in confidence levels. Four indexes will be developed: a Market Index, Sector Index, Bitcoin Index, and a Strategy Index. The Market, Sector, and Bitcoin indexes will be launched in April, and Upbit will launch the Strategy Index later in the year.
Each index uses a different set of metrics to make its calculations. The market cap-weighted index will use the total market liquidity ratio to enable investors to observe the flow of all cryptocurrencies at a glance. Classifying the category of each type of digital coin will provide the data for the Sector Index, and the Bitcoin Index will use the market share and dominance of BTC to build its results. The Strategy Index uses a longer-term quantifiable investment quotient to analyze portfolios and track their yields.
President of Dunamu, Lee Seok-woo, told local media:
The present situation of the cryptocurrency market is quite similar to the traditional financial market based on stocks and bonds in its early stage. Accordingly, as the market gets more sophisticated, the UBCI is expected to play an important role in this area in the future. We will also disclose the index rulebook and let the market evaluate it before long.
Upbit currently handles $732 million (86,700 BTC) per day, according to Coinmarketcap. It has recently added a number of new altcoins to its listings, including Icon and Tron, and is the country’s second largest exchange after Bithumb.
Will cryptocurrency indexes increase trade and bolster markets? Add your thoughts below.
Images courtesy of GoodFreePhotos, Pixabay, and Bitcoinist archives.