Top coins and creating an index

The first step is to limit the number of coins that will be considered. I’ve included the top 5 coins by market cap. Following is a table of the 5 coins. The data was from July 19^th. After selecting the coins, I used the first 2 quarters of 2019 to compute the average daily trade volume in dollars is used to compute the weighting factor for an index. The factor column will be used on the closing prices each day to compute that day’s index.

Coin	Title	Price	MarketCap	AveClose	AveVol$M	Factor
BTC	BITCOIN	$10,561.32	188.283	$5,555.64	321.97	59.8%
ETH	ETHEREUM	$226.13	24.191	$175.85	107.5	20.0%
LTC	LITECOIN	$99.09	6.217	$72.00	44.68	8.3%
BCH	BITCOIN CASH / BCC	$318.86	5.708	$248.75	32.7	6.1%
XRP	RIPPLE	$0.33	32.717	$0.35	31.44	5.8%

So, what is the value of this index? Not much initially. I plan on making use of this as a factor in developing a trading scheme later. Following is an interesting graph showing data from the 1^st quarter of this year.

The top of the chart has the BTC closing prices. The other two other lines are a plot of the computed values from the linear and quadratic regressions.  The bottom group are the index values. The linear line showed both grew slowly during the period. The quadratic regression indicated an increasing growth at the end of the period.

Next I’ll start analyzing different scenarios for buying and selling bitcoins. I’ll tweet @billlanke when I post again.