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Investing in cryptocurrencies can be tricky when you have to choose winners one-by-one. That’s where crypto indexes come in—packaged-deal digital assets into one investment, akin to approaches seen in the stock market. By tracking or investing in the crypto market as a whole, indexes provide you with low volatility and risk as you spread exposure across your basket of coins.
We want to show five of our favorite crypto indices today. These top cryptocurrencies offer convenient options for an investor’s wanted exposure to the wider crypto market while helping them stay diversified in their crypto portfolio. These tools can benefit hands-off investors and DeFi enthusiasts alike, as they help you set up a portfolio while minimizing risk.
Before we dive into the top options, let’s ask ourselves the question: why should we invest in crypto indexes?
As most may know, the crypto market is not inherently stable. While the Bitcoin network and Ethereum assets are quite newsworthy, it is often the smaller altcoins that perform poorly overnight, or even experience a 1,000% gain in a matter of weeks. Where crypto indexes come into play is having the index track what can be quite a chaotic scene and offer exposure:
As per CoinSniper’s analysis of crypto ETFs, the indexes “democratize access to institutional strategies and become ideal for retail investors.”
The SoSoValue Indices (SSI) is our number-one choice among innovative crypto indices. SSI is a secured, transparent on-chain index protocol that permits you to invest in several cryptocurrencies through a single token. One of its index token’s largest indexes, MAG7.ssi, contains seven of the largest cryptocurrencies by market capitalization. This spans the most prominent market-share players in Bitcoin and Ethereum, along with a host of other major coins (e.g., BNB, XRP, Cardano, Solana, etc.), providing a broad exposure to the top unique crypto assets in one fell swoop.
SoSoValue prides itself on its decentralized nature, where the index is implemented via smart contracts on the blockchain (indeed, MAG7.ssi is issued on Coinbase’s Base chain itself). This on-chain design ensures transparency and ease of access; the investor can buy or trade the index token directly from the crypto wallet. The SoSoValue Crypto Index (SSI) also levels the seven assets’ overall inclusion shown via a clever general approach, as each asset starts at a minimum 10% allocation, the remainder most accurately attributed by market cap. This way, the smaller lesser-known assets in the index possess meaningful share instead of being automatically overshadowed by BTC or ETH. The index is rebalanced monthly, meaning it reflects changes in the market and includes any potential installs top-performers that are emerging over time.
In short, the SoSoValue’s MAG7.ssi offers a one-pot, easy way to “get a slice of the crypto pie.” Strong general diversification and on-chain security provide both veteran and rookie investors equal value within this trouble-free crypto basket—they will maintain their position for the long haul.
The Bitwise 10 Crypto Index is among the most trusted crypto indices with broad market coverage. Excluding stablecoins, the index features the largest 10 cryptocurrencies by market cap, maintained by Bitwise Asset Management. In terms of market cap, Bitcoin and Ethereum have the largest, and other major coins in the top 10 also carry significant weights. It is popular for investors seeking a single investment covering approximately 80% of the total crypto market value.
Bitwise makes the index available thought the Bitwise 10 Crypto Index Fund (ticker: BITW)—a publicly traded investment fund, mimicking the index’s performance. It offers a safe, regulated option for investors looking for diversified crypto exposure via a conventional brokerage account. The main features of the Bitwise 10 Index are the monthly rebalancing as well as thoughtful screening of assets—the index is current and investable.
Investing in the Bitwise 10 means indirectly obtaining exposure to decades-old crypto projects at once. The index became the standard for large-cap crypto performance, perfectly suited for investors looking for broad coverage of large-cap assets with a single index product.
The Bloomberg Galaxy Crypto Index (BGCI) is heavily-known and features a template for institutional quality. Originally designed in partnership between Bloomberg and Galaxy Digital, BGCI tracks the performance of the largest and most liquid cryptocurrencies. Depending on the value of the assets, the index can carry a maximum of 12 major crypto assets and is weighted by market cap. The original members of the BGCI index included Bitcoin, Ethereum, and other major coins representing various categories (for example, XRP for payment networks, and Monero or similar for privacy coins).
BGCI is analogous to the stock market index S&P 500 as a benchmark for the state of the digital asset market. It is market cap weighted and rebalanced monthly, with rules in place to limit the weight of a single asset (to ensure that no coin dominates the index). This gives a broad distribution among the index members. Both investors and fund managers are utilizing the Bloomberg Galaxy Crypto Index to assess performance or create products for investment. Practically, if you invest in a fund tracking BGCI, you would be holding a basket of major cryptos representative of the larger market leaders.
BGCI appeals to investors because of the Bloomberg name and the institutional quality of the methodology behind it. It ensures that the cosmos of the index is compiled and maintained in a transparent, rigorous manner. If you are trying to gauge or invest in the crypto market’s premium assets, BGCI is there for you.
Located right next to the Nasdaq Crypto Index (NCI), this prominent index offers diversified exposure to the crypto market. Co-published by Nasdaq and crypto investment company Hashdex, NCI was designed to be a dynamic, benchmark index that is representative of a broad segment of the cryptocurrency market. Unlike static indices, NCI does not allocate a fixed percentage of coins; rather, it comprises of a selection of top cryptocurrencies that meet established liquidity and custody requirements. This implies that this index will modify itself as its market evolves in order to capture a majority of the total crypto market cap in the long term.
NCI employs a methodology-driven approach in selecting only assets that are investable and liquid. It ensures all components are listed on credible exchanges and are able to be custodied safely – both of which insures security for an investor’s interest. It is a market-cap weighted index, and is rebalanced once every 10 business days in order to keep its broad market representation intact. As an example of practice, NCI typically covers both the largest crypto assets (Bitcoin, Ethereum, etc.) as well as dynamic major players, which switch in and out of relevance over time.
For investors, the Nasdaq Crypto Index is a groundbreaking way to measure “the crypto market” aggregate performance. In some parts of the world, there are also products tracking NCI in the form of an exchange-traded fund (ETF/ETP), making an investment in the index much more straightforward. In case you are looking for a comprehensive representation of a crypto index backed by a familiar financial institution (Nasdaq), NCI is the better choice that offers a bridge between legacy systems and the future world of digital assets.
The final in the list is the S&P Cryptocurrency Broad Digital Market Index, was launched by S&P Dow Jones Indices. True to its name, this index offers extensive coverage of the crypto market – it comprises of a large array of cryptocurrencies (over 240 coins, as of launch) across the market cap spectrum. It aims to replicate the performance of the whole digital asset market (excluding stablecoins and certain tokens which do not meet its requirements). In other words – this is one of the most diversified crypto indices on offer by any prominent index provider.
Index weighting for the S&P Broad Digital Market Index is based on the market capitalization, which causes larger projects to influence the index more than smaller ones. However, by aggregating such a wide segment of the market, S&P gives investors access to not only the top handful of coins, but mid- and small-cap cryptocurrencies which represent the diversity of digital assets. This is ideal for investors who believe in the growth of the crypto market as a whole, rather than just the top 10 – other projects can play a significant role as well.
For those used to stock indices such as S&P 500, having S&P develop crypto indices adds an element of credit and familiarity. While this index is not as easy to invest in (you might not have a retail access to it in your region), it does serve as a reference and may lead to future index-linked investment products. If maximum diversity within the crypto space is what you are looking for, the S&P Cryptocurrency Broad Digital Market Index is your reference.
Crypto indices are transforming how investors approach the digital asset market. By combining multiple cryptocurrencies into single, easy-to-invest instruments, these indices allow you to participate in the overall growth of crypto while mitigating the risk of picking the “wrong” coin. Whether you choose an on-chain index token like SoSoValue’s SSI for direct DeFi exposure, or a more traditional index fund like Bitwise 10 or products tracking Nasdaq or S&P crypto indices, the core idea is the same: diversification and simplicity.
By incorporating one or more of these top crypto indices into your investment strategy, you can confidently ride the ups and downs of the crypto market with a balanced approach. They’re a powerful tool to help optimize your portfolio for long-term success in the ever-evolving world of cryptocurrency. Happy investing!
Disclaimer
The information on Coinsniper is user-generated and not verified. Coinsniper does not provide financial advice or facilitate transactions.
Also note that the cryptocurrencies listed on this website could potentially be scams, i.e. designed to induce you to invest financial resources that may be lost forever and not be recoverable once investments are made. You are responsible for conducting your own research (DYOR) before making any investments.
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