In the plummeting market, the JJO35 index continues to follow a rebalancing strategy aimed at maximizing investment returns. You can find detailed information on what rebalancing is in the article "Rebalancing: what it means"
In this article, we will examine how the JJO35 index responds to the cryptocurrency market decline and the advantages it can offer to investors in such conditions.
Regular Rebalancing of the Index
The JJO35 index conducts regular rebalancing on a specific date each month. During the rebalancing process, the index performs the following operations:
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The index sells cryptocurrencies that have dropped out of the top 35 if such changes have occurred in the index composition and replaces them with new coins that have entered the top 35. This allows for the removal of assets that are not showing the expected efficiency and contributes to the inclusion of more promising coins in the index.
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The index adjusts the percentage distribution of coins to match the initial proportions. This is important for maintaining diversification and reducing investment risk.
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When the positions of coins in the ranking change, the algorithm adjusts their percentage distribution in accordance with their new positions.
Current Percentage Distribution
At the time of writing this article, the JJO35 index has the following percentage distribution of cryptocurrencies:
- Bitcoin (BTC): 28%
- Ethereum (ETH): 28%
- Binance Coin (BNB): 5.75%
- Ripple (XRP): 5.01%
- Solana (SOL): 1.7%
- Cardano (ADA): 1.61%
- Dogecoin (DOGE): 1.52%
- TRON (TRX): 1.41%
- The next 27 coins: 1% each
Response to Changes in the Top 35 Rankings
If cryptocurrencies change their positions in the top 35 rankings, the algorithm adjusts the index to reflect their new positions. This allows the index to adhere to the original coin proportions and adapt to market changes.
Conclusion:
The JJO35 index is configured to maintain the original coin proportions and change its composition as needed. In the event of a market decline, it undergoes rebalancing, which helps mitigate losses and reduce risks. However, it's important to remember that if the entire cryptocurrency market is declining, the index will also show a loss. The essence of index investing is to demonstrate smaller losses during market downturns and higher profits during its growth compared to other investment strategies.