Crypto indexes are passively managed baskets of crypto assets that enable investors to track performance and invest in varying sectors of the crypto ecosystem.

The RP50 is a single click investment option for investors who want diversification, but don’t want to get into the weeds of picking different tokens. The RP50 will be rebalanced every quarter to ensure investors in the RP50 are always in the best tokens (as measured by market cap). Currently, Bitcoin and Ethereum are dominant, but this may not last forever. Investing in a broad market index like the RP50 provides investors with the opportunity to capitalize on potential shifts in the future as other tokens rise to prominence, eliminating the need for constant monitoring and active token trading.

Diversification is a fundamental principle in investing, often essential for managing investment risk. By spreading investments across a wide range of assets or asset classes, investors can buffer against the adverse performance of a single security or sector. It’s akin to the age-old adage of not putting all your eggs in one basket. Market conditions are unpredictable, and individual assets can be influenced by a myriad of unforeseen factors. When an investor’s portfolio is well-diversified, the negative performance of some investments is likely to be counterbalanced by the positive performance of others. Consequently, diversification can help smooth out returns over time, reducing the volatility of the portfolio and enhancing the potential for steady, long-term gains.

Equally weighted indices, while emphasizing each constituent, can present certain challenges compared to market-cap-weighted indices. First, equally weighted indices typically require more frequent rebalancing, which can lead to higher transaction costs and potential tax implications. This is because as prices fluctuate, the index periodically needs to realign to ensure each constituent maintains an equal weight. On the other hand, market-cap-weighted indices naturally account for the size and influence of larger constituents in the broader market. By mirroring the market’s actual composition, these indices tend to be more representative of market sentiment. Moreover, they can be more stable and less susceptible to the volatility of smaller constituents. Hence, for many investors, market-cap-weighted indices offer a more efficient and intuitive approach to tracking the market’s performance.

The RP50 uses Market capitalization weighting which is the most widely used methodology for constructing investment indices, providing investors with a comprehensive representation of a particular market or sector’s performance. At its core, market capitalization weighting assigns higher weights to assets with larger market capitalizations, effectively reflecting their greater influence and significance within the market. As a result, this approach ensures that the index is more heavily influenced by the most prominent assets. Market capitalization weighting offers several advantages, including ease of implementation and low turnover, making it a popular choice for passive investment strategies.

The five largest equity indices that use a market capitalization weighting scheme are:

‍• S&P 500 (U.S.): This index includes 500 of the largest U.S. companies by market capitalization and is arguably the most referenced equity index in the world.

‍• Nasdaq Composite (U.S.): An index that includes more than 3,000 companies listed on the Nasdaq stock exchange. It’s heavily influenced by tech companies.

‍• FTSE 100 (UK): It includes the 100 largest UK companies by market capitalization listed on the London Stock Exchange

‍• Hang Seng Index (HSI) (Hong Kong): It tracks the 50 largest companies listed on the Hong Kong Stock Exchange.

‍• DAX (Germany): This index represents 30 of the largest publicly listed companies in Germany.
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How much bitcoin and Ethereum are in the index?
‍Due to the market cap weighting approach, currently, Bitcoin is approximately 62% and Ethereum is approximately 24%. The other 48 tokens are currently far less prominent, but we wanted to leave room for the dynamics to change over the next 5 / 10 / 20 / 50 years. As digital assets find more and more utility in everyday life, the correlations will start to break down and the performance of different tokens will start to vary significantly.

A major benefit of investing in a crypto index is that investors can gain exposure to a diversified portfolio of cryptocurrencies, which can help to reduce risk and volatility when compared to investing in a single crypto. In addition, crypto indexes offer a time-efficient and simplified approach to crypto investing, whereby a regularly rebalanced index gives investors an easy way to invest in specific components of the crypto ecosystem without having to research the long tail of emerging crypto projects.

Yes - Rocketplace Indexes are rebalanced quarterly, starting Q1 2024. With every rebalance, Rocketplace will reconstitute the underlying assets in each index (i.e. update included assets) and rebalance the underlying weighting, as defined by the circulating token supply.
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You can only buy and sell Rocketplace Indexes. Sending indexes is not supported at this time.

Unlike Coinbase and Kraken, Rocketplace does not charge fees to buy, sell or transfer crypto.

Rocketplace makes money on the spread (difference between the bid and ask price) when fulfilling trades.

Rocketplace is supported in the United States. A complete list of supported states can be found here.