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On the surface, it’s hard to make a case the crypto industry is in a healthy place. In fact, most would contend it’s in the mud. But, if you dig a little deeper, you’ll find the market is near its healthiest level in the past 12 months, at least according to this chart.
Created by Boston-based data analytics firm Flipside Crypto, the FCAS 25 Index is a weighted measure of the 25 best-performing crypto assets by FCAS score — a score derived from evaluating three components of the specific digital asset: market maturity, developer behavior and user activity.
“The reason it [the index] exists is it’s important to discern whether the industry is achieving growth or not, because everything is often clouded by speculative behavior, especially related to price,” said Dave Balter, CEO of Flipside Crypto. “We hear a lot of ‘well the industry must be over,’ but it’s far from over, it’s humming.”
Flipside Crypto
How healthy is the crypto industry?
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The index is heavily weighted towards developer behavior and user activity, which the company compares to customers and products of a traditional business.
Developer behavior attempts to gauge the commitment to ongoing projects on the blockchain, while user activity measures actual engagement by assessing on-chain traffic and utilization of projects. “What struck me was some of the projects that have a strong community of developers building on the blockchain despite their price,” said Eric Stone, head of data science at Flipside Crypto.
Speaking about EOS, the smart contract-based protocol, Stone added, “they have a tremendous amount of developers building on the platform, even as their public price has fallen off.”
Market maturity assesses price, volatility and liquidity of an asset, but has less than a 5% impact on its score.
One year ago, the FCAS 25 Index stood at 770 when a single bitcoin BTCUSD, -0.09% fetched just shy of $8,000. Fast forward a year and bitcoin has lost around half of its value, but the FCAS 25 Index has risen to 794, just 10 points off its all-time high.
An asset within the index is measured on a scale of 1 to 1,000.
Flipside Crypto
FCAS crypto-asset rating
So what’s behind the improving ‘health’ over the past 12 months? Flipside Crypto said growing institutional investment and waning initial coin offering, or ICO-type work could have fueled fundamental activity on specific blockchains. “[It] has led to a decline in hobbyist investor activity, but a rise in legitimate developers moving into the space and real teams being built around new use-cases.”
An ICO is a crowdfunding tool for crypto-related ventures.
Read: ICOs continue to raise money via SEC back door
Undoubtedly, casual observers — especially those invested in the digital coins — still see price as the bellwether for the opaque industry, but, below the surface activity on the blockchain suggests, at least according to this index, it’s not all about price.
“Fundamental health is not inextricably tied to price, the way it is for the public market, because price does not yet reflect fundamental health, but something more like momentum (often hype) or just plain manipulation,” the company said.
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