Enhancing the Crypto Index

Crypto markets have been on a tear over the past year and are growing at an incredible rate. The growth, fueled by the coronavirus pandemic which exposed flaws in the way our global economy functions, has captured the attention of the institutional investment sphere. With this newfound attention, crypto markets are slowly evolving into a mature ecosystem seeing higher sophistication in both market participants and tradable instruments.

Cryptocurrency traders have an increasingly diverse toolkit of financial products available for trading, ranging from instruments typically seen in traditional financial markets to more crypto-native products. Across the wide range of available options, crypto indexes have satisfied a strong market demand garnering billions of dollars in assets under management (AUM).

Despite the increasing number of index options, the vast majority of crypto indexes are the same. Most follow the same construction methodology and contain similar assets exposing investors to almost identical allocations. Luckily, traditional finance has explored the index construction space extensively providing crypto markets a number of hints on how to enhance the crypto index.

Crypto Indexes by the Numbers

In the last year, crypto has been flooded with a variety of indexes. Below I’ll give a brief overview of a number of indexes that have captured a considerable amount of market attention and AUM.

Bitwise 10 Crypto Index Fund