In the latest edition of the Crypto for Advisors newsletter, Patrick Murphy from Eightcap shares thoughts on the development of crypto as a legitimate asset and draws comparisons to the evolution of Indices during the S&P’s formative years.
Additionally, Leo Mindyuk from MLTech responds to inquiries about indices in the Ask an Expert section.
Enjoy the read!
– Sarah Morton
What the S&P 500 Did for Equities, Indices Will Do for Crypto
Similar to today’s crypto landscape, equities in the early 1900s represented an emerging and largely unregulated market, characterized by fragmentation and limited public comprehension. The introduction of the S&P 500 in 1957 transformed the financial environment, offering a benchmark for investors. This not only legitimized equities as an asset class but also facilitated mainstream adoption. Are we at a similar juncture with cryptocurrency? With indices set to play a pivotal role in its development, it seems we are.
The maturation of cryptocurrency and the shifting role of indices is making them catalysts for broader crypto acceptance. For instance, the CoinDesk 20 Index (CD20) serves as a market benchmark, offering insights and acting as a foundational element for expanding investment avenues.
A fragmented and volatile market?
The crypto landscape is a fragmented arena, a blend of innovation and instability. With over 23,000 cryptocurrencies available, the majority exhibit low trading volumes and limited liquidity. This “long tail” consists of numerous projects that have not gained traction; estimates indicate over half of the cryptocurrencies launched since 2021 have become inactive. A stark example: 1.8 million tokens were categorized as “dead coins” in just the first quarter of 2025.
Despite the overwhelming quantity, trading activity is heavily concentrated within a select few top cryptocurrencies, revealing the market’s fragmentation.
Extreme volatility is a hallmark of crypto’s fragmentation, vividly illustrated by bitcoin’s significant downturns and surges. Price “pumps” often occur unexpectedly, and paradoxically, the market can remain static even amidst crucial news. Prices frequently behave illogically following significant announcements, only to suddenly rise or drop without a clear reason. This unpredictability highlights the thin and concentrated nature of trading across the sector.
A prime illustration of this trend is the SEC’s approval of Ether (ETH) exchange-traded funds (ETFs) in May 2024. Despite being a significant regulatory event, ETH’s price barely changed on announcement day. However, a week later, it experienced a 15 percent increase without any new information. Such delayed and seemingly irrational responses are surprisingly prevalent, underscoring the dominance of thin liquidity, concentrated holdings, and sentiment-driven trading in substantial parts of the crypto market.
Signs of maturation
In spite of current hurdles, the crypto market is demonstrating concrete signs of maturation. Institutional interest is skyrocketing, with key financial entities investing in, partnering with, and creating crypto-focused products. Regulatory clarity is also progressively improving worldwide.
Key regulatory & institutional milestones
- ETF approvals: Beyond the initial spot bitcoin and ETH ETF approvals, these have now expanded to Solana and other cryptocurrencies.
- MiCA regulation: The EU’s Markets in Crypto-Assets (MiCA) framework signifies the first comprehensive crypto licensing within a tier-one market. OKX was the first global exchange to secure a MiCA license, allowing it to offer regulated services to over 400 million Europeans. Following this, Coinbase, Kraken, Robinhood, and Bybit have also obtained MiCA licenses, indicating industry growth and broader acceptance.
- Stablecoin Genius Act: This new US Federal legislation for stablecoin issuers seeks to provide regulatory clarity, encourage innovation, and safeguard consumers. Circle’s recent NYSE listing, alongside central bank digital currency (USDC) becoming the EU’s preferred compliant stablecoin (adopted by exchanges like Coinbase, OKX, and Binance), marks a significant milestone for stablecoins.
Growing stablecoin adoption
Data from Eightcap in 2025 shows stablecoin payments now represent 18 percent of monthly deposits, with Tether , representing a broader trend. In 2024, stablecoins processed an estimated $27.6 trillion, surpassing Visa and Mastercard’s combined transaction volume by 7.7 percent.
The role of indices
The current crypto marketplace mirrors the equities market before the S&P 500’s inception. The introduction of comprehensive indices marks a crucial advancement.
A call to action
It is essential to develop cryptocurrency indices that can impose structure on the existing chaos. The CoinDesk 20, now available in over 20 investment vehicles worldwide via Eightcap, ML Tech, WisdomTree, and others, exemplifies how indices can deliver clarity, transparency, and diversified exposure to digital assets. The industry needs to build upon this framework, creating increasingly robust tools for traders and investors. The complete integration of digital assets into the global financial ecosystem isn’t merely a possibility; it’s an inevitability.
– Patrick Murphy, chief commercial officer, Eightcap
Ask an Expert
Q: Why are crypto indices the logical next step for institutional adoption, similar to what the S&P 500 did for equities?
A: The S&P 500 broke down complexity, offering structure, benchmarks, and accessibility. Rather than underwriting each individual stock, investors could engage with a broad, rules-based proxy for U.S. stock market exposure. This unlocked trillions in capital. Crypto today is still fragmented and noisy, making it difficult to benchmark. It requires similar evolution. Institutional allocators and many retail investors aren’t asking “Which token should I own?” — they want diversified, well-balanced exposure to the asset class. Index products are how crypto achieves scalability. It’s not about picking individual coins but about providing exposure through rules-based systems that adhere to compliance, liquidity, and transparency norms. The rise of crypto-native indices and systematic strategy frameworks is essential for transitioning from speculation to scalable allocation.
Q: Why does the lack of crypto indices impede adoption by institutional allocators and financial advisors?
A: Indices are crucial instruments for allocation, benchmarking, and communication. Without them, institutional investors or advisors find it nearly impossible to advocate for crypto inclusion within conventional asset allocation models. They lack performance, volatility, and risk contribution reference points. Advisors can’t model it; CIOs can’t underwrite it; committees can’t approve it. This results in friction across investment, compliance, and operational layers. Indices facilitate the translation of crypto from an abstract opportunity into a tangible, investable asset.
Q: How does the indexification of crypto reshape opportunities for both allocators and systematic strategies?
A: Indices provide the framework that both allocators and quantitative managers require. For institutions, they yield benchmarkable exposure that can be modeled, monitored, and validated within classic investment structures. For systematic strategies, indices become practical elements: factors for modeling, hedging layers, or allocation signals. However, to fully exploit this potential, participants need an institutional wealth management framework: real-time profit & loss and risk views, customizable strategy access via API, and secure, non-custodial engagement across premier exchanges. With the right wealth platform, indices shift from being passive benchmarks to active components: primed for allocation, systematic trading, and integration directly into institutional quantitative practices.
