You know that awesome feeling when you launch your first Crypto Strategy? You feel excited and so proud! This is how we felt back at the end of 2016, when the Blockchain Index (BLX) was made public. Three years later, and now is just the right time to introduce some changes.
For those who are just at the beginning of the investment journey, Indexes are strategies that try to mimic the market. The two main benefits are diversification, meaning that your investment is less risky, and on the other hand top companies or top blockchain projects are included in the structure. You must have heard about the S&P 500 in the traditional world, while BLX is one of the first indexes in the crypto world.
BLX still wears its crown
The Blockchain Index was designed at the end of 2016 as a use case for the ICONOMI platform, and has very quickly become our flagship product. As our first Crypto Strategy, it attracted many investors and is, therefore, the biggest public Crypto Strategy on the ICONOMI platform, both when it comes to the number of investors, as well as the AUM, currently at €2,678,714.13.
The crown needs different jewellery
At its creation, a vast diversification made sense due to the crypto market movements. However, changes are part of life, and also a part of financial and crypto markets. In the past three years we have seen a great development of the crypto market, and consequently there have been changes. Especially in the past year when the market took a down-turn, a lot of investors have turned to Bitcoin.
Thus, the logical step for us, is to update the strategy of the Blockchain Index in order for it to better reflect the state of the market.
With institutional players entering the market and trading mostly crypto assets with a large market cap and greater liquidity, we decided to reduce the number of assets in the structure of BLX, limiting it to 15 (before there were 30).
The new structure
Therefore, BLX, will now consist of the top 15 crypto assets from the market that are also available on the ICONOMI platform. Furthermore, with the Bitcoin dominance rising due to its adoption in the traditional financial world, we are capping it at 40% of the portfolio. If it drops below that range, we will keep its portfolio weight at its actual dominance level. Since we want BLX to be a well-diversified vehicle that keeps a finger on the pulse of the blockchain economy, we are excluding stable coins from its structure.
We will calculate new weights and rebalance BLX on the first day of each month. Last but not least, since BLX will stay a passively-managed Crypto Strategy, we will keep the pricing at a 3% yearly management fee.