"I don't want to use indexes, I don't know how to use them, and quite frankly, I don't have any idea how to make money from them..."
That (and similar) thoughts often come up in crypto trading circles. We get it. Most presentations and articles treat indexes like abstract ideas rather than useful tools. They talk about what indexes measure but rarely about how to actually profit from them. So this time, let's focus on the three indexes that matter the most and how businesses can make money with those indexes.
The PRIMKT Index (Principal Market)
Did you ever notice that Bitcoin can trade at different prices across exchanges? Annoying, right? PRIMKT tries to fix this by showing what is called "principal market prices".
What's great about PRIMKT isn't the idea (price indexes exist everywhere) - but how they filter out the bad data. They don't just average everything - it has a smart system that spots and removes manipulated markets.
This creates some interesting business ideas:
- You could build pricing models that help investors figure out if assets are correctly priced. These models can spot when prices differ from basics, creating trading signals for profit or better timing.
- The accounting headache is real too. By creating automated accounting tools that pull standard prices for financial reports, you can solve the 'Which price do we use?' problem that accounting teams face when dealing with crypto assets.
- The rule-followers are desperate for solutions too. A tool that helps businesses document their crypto holdings using widely accepted price references would be valuable… especially for companies needing to satisfy auditors or tax authorities.
For example, a trading firm could build desktop software for big traders that shows their trades against average price curves, highlighting times when they consistently pay too much. The software could test different trading approaches using past data, showing exactly how much they would have saved by using different timing. One fund I helped discovered they were consistently buying too early in the morning, and shifting their trading time saved them 0.4% per trade across their portfolio.
VWAP Index (The Volume Story)
VWAP is trickier but more powerful for actual traders. It tracks where money is really changing hands. Looking only at the last traded price can be misleading, especially for big orders. VWAP gives a more accurate picture of market activity, helping traders buy and sell more efficiently and lose less money on trades.
Some ways to make money from VWAP insights:
- Trading tools that break large trades into smaller ones, aiming for better average prices. These tools constantly compare current prices to VWAP levels and adjust timing as needed.
- Portfolio value tools give funds more accurate views of their holdings based on prices where they could realistically sell. This matters greatly for large funds that couldn't sell everything at the displayed prices.
- Performance tracking tools that measure trading results against volume-weighted standards. These help traders understand if they're getting good deals compared to overall market conditions.
For example, a trading firm could create a subscription service for big traders that looks at their past trades against VWAP levels, finding patterns where they could improve. This would save clients millions in trading costs.
CAPIVIX (Volatility's Crystal Ball)
This one's my favorite. While everybody's looking at price, CAPIVIX tries to predict how wild things might get. I watched a trader lose all his money a couple of months ago because he sized his trades for "normal" price swings right before a news event. He didn't account for the fact that price swings themselves change.
This creates some different opportunities:
- Option pricing tools that help traders set fair prices for crypto derivatives. Traditional tools often fail in crypto markets, but CAPIVIX-based formulas can better handle crypto's unique price swing patterns.
- Risk management dashboards that alert portfolio managers to increasing market craziness before major moves happen. These early warning systems help traders reduce exposure before big swings occur.
- Smart trading systems that automatically change position sizes, stop-loss levels, and borrowing based on expected market conditions. These systems prevent the common mistake of using fixed settings in changing markets.
A practical example: A risk management firm could develop a dashboard for crypto hedge funds that automatically changes position size suggestions based on CAPIVIX readings, potentially preventing the huge losses that happen when traders keep large positions during wild market swings.
I'm seeing a pattern across all these opportunities. The indexes themselves aren't the moneymaker - it's the tools built on top that solve specific problems.
If you want to earn money from the indexes - ask yourself: who's struggling with crypto valuations right now? Which traders are losing money on poor trades? Who needs better risk signals? That's where you should focus.
Raw data is becoming cheap and common. Solutions are not.
What problem would you tackle first?
Written by
Marika Szczawinska
