Dynamic Weighting is an investment strategy where the proportion of different assets within a portfolio or index is adjusted periodically based on predetermined criteria. In digital asset indices, this means the allocation of various cryptocurrencies changes over time according to factors like market capitalization, liquidity, or volatility. This approach aims to optimize returns or manage risk.
Context
News concerning crypto indices often highlights the application of dynamic weighting to adapt to the volatile and quickly changing digital asset market. This methodology aims to improve index performance by reacting to market shifts rather than maintaining static allocations. Investors monitor how these adjustments influence index performance and overall market representation.
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