K-Y Index: A Dow Jones like Index for Global Cryptocurrency Markets

Abstract

The Dow Jones Industrial Average (DJIA), or Dow Jones, is a stock market index that measures the stock performance of 30 large companies listed on stock exchanges in the United States. Over a period of time, it has become the global standard, a key indicator of the health of the US economy (in particular) and the World economy (in general). There are other indices like the S&P 500, Russel 3000, the Nifty 50 (Indian Stock Exchange), Nikkei (Japan) etc which have become key indicators of the Economic activities of the respective nations and regions around them. There are several advantages of a benchmark indicator or index that measures a particular market, as it provides a sense of direction of where the market is headed.

In the last 7-10 years the world has seen the rapid rise of Cryptocurrency markets. Today the Global Cryptocurrency Market (GCM) is valued at greater than half a trillion US Dollars and still growing. Interestingly, no credible benchmark index or indicator has been designed for the Global Cryptocurrency Markets. Those that do exist, capture a very small portion of the market sentiment or have a specific purpose and not useful to the layman investor. This lack of a global, credible benchmark index or indicator is one of the reasons that the cryptocurrency market is seen as volatile and unstable.

This paper introduces the concept of the K-Y Index which measures the Global Cryptocurrency market by capturing maximum market sentiment possible. Firstly, we discuss the basics of a Stock market Index and why a similar Index is needed for the GCM. We will then delve into the methodologies of designing a Market Index and choose the best method that can fulfil the requirements of the K-Y Index.

We will then introduce the K-Y Index and how it is calculated. Finally, we shall conclude by discussing the possible uses of the K-Y Index.

Keywords: bitcoin, cryptocurrency, ethereum, dow jones, k-y

JEL Classification: C43, F33, G32, L1, L15, O16, O33