Shrimpy Pro has the most powerful indexing tool in the crypto market. Creating an index on Shrimpy Pro is only a few clicks away. In this article, we will cover how to connect exchange API keys, configure a indexing strategy, execute an initial rebalance, and more.
Let’s walk through the steps to create and manage your own exchange-traded crypto index with Shrimpy Pro.
Create & Connect your API Key
Before we can start setting up our APIs for trading, make sure you’ve signed up for an exchange account and followed one of these guides on how to link your Exchange account API keys to Shrimpy Pro.
How to Link An Exchange Account to Shrimpy Pro.
Once you’ve linked your API keys, head on over to the Automation tab to create your personal cryptocurrency index. Here’s where the fun of creating your crypto index begins. Begin by selecting "Create Automation".
Construct your Custom Cryptocurrency Index
You’ll have two options on how you’d like to construct your portfolio. You can choose to add crypto assets manually, or you can choose to use Shrimpy Pro's Index feature to automatically construct a portfolio based on selected preferences. Continue by selecting "Create Index."
Market Cap Weighted Index
When creating a market cap weighted index, there are 3 main settings to consider: # of Assets, Minimum Asset %, and Maximum Asset %.
Choosing a market cap weighted index means the portfolio will be allocated based on the weight of each asset’s market cap relative to the other assets in the portfolio.
# of Assets sets the number of assets which will be included in the index. The assets included are selected by highest market cap first, progressing to lower market cap assets.
Minimum Asset % determines the lowest allocation percentage that will be assigned to any asset in the portfolio. Due to the market being heavily weighted towards a few high cap assets, this can help prevent your index maintaining extremely small percentage of an asset.
Maximum Asset % configurations are meant to serve as an upper boundary for the maximum risk exposure of a single crypto asset. This prevents a particular asset from consuming more of the index than you would desire.
To create an index that closely follows the market, you can:
Increase # of Assets
Decrease Minimum Asset %
Increase Maximum Asset %
Creating an equal-weighted index is even easier. Instead of having to choose the minimum and maximum allocation percentages, you now only have to select the total # of Assets you would like. Remember to "exclude" any assets that you do not want included in your portfolio.
To learn more about the effects of diversifying your crypto portfolio, we recommend reading the articles below that discuss portfolio diversity and optimal asset distribution.
Portfolio Diversity: A Technical Analysis
Optimizing Asset Distribution For Cryptocurrency Rebalancing
All crypto portfolios constructed using the Index feature will operate as dynamic indices. A dynamic index simple means that the weighting and rankings for each asset will be updated before every rebalance period. If an asset increases in price, the percent allocation for that asset in the index can then also increase. In addition to the weightings, if the positions of the assets in your index change, they will also be update. For example, say you created an index which holds the top 10 assets. If the 10th asset by market cap switches with the 11th, this will be updated in the index by removing the previous 10th asset and replacing it with the new 10th asset.
Select a Rebalance Period for your Portfolio
As you’re creating your cryptocurrency index portfolio, you may notice the Rebalance Period option to the right side of the asset selection window. The rebalance period simply means how often a portfolio is rebalanced to its desired asset allocations.
This is where the Shrimpy Pro magic happens. Unlike other automated trading bots which involve complicated technical indicators and signals, Shrimpy Pro follows a simple but straightforward approach of passive management through indexing and rebalancing. Learn more about the rebalancing below.
Rebalancing & Cryptocurrencies: An Introduction
When deciding on the best rebalance period for your crypto portfolio, consider your risk tolerance to determine the ideal rebalance period. We recommend our studies below that discuss various rebalancing strategies and results.
Rebalance vs. HODL: A Bear Market Analysis
Rebalance vs. HODL: A Technical Analysis
Once you’ve added your desired crypto assets and allocations, save and activate the portfolio to automatically trigger rebalance events moving forward.
Rebalance your Crypto Index Portfolio
Once you’ve completed setup and activated your crypto index portfolio, head on over to the Dashboard tab. You will be able to perform manual rebalancing events directly through the Dashboard.
Note: You must have an activated portfolio in order to perform any rebalancing events. If you choose to perform a manual rebalancing event, the timer for automated rebalancing events will be reset to the time of the manual rebalance.
If you want to learn more about the various settings in the index feature, please refer to the following blog post:
Cryptocurrency Index Funds - Personal Asset Management
Have questions, comments or concerns? Feel free to reach out to us via the blue "Support" button found in the bottom left corner of your Dashboard, or send an email to Support@Shrimpy.io.