Crypto Index ETFs Rise as Investors Pursue Ease of Investment

Since January 2024, US spot crypto ETFs have garnered over $70 billion in net inflows, establishing traditional financial investment vehicles as the primary gateway for new capital into the burgeoning sector.

This increase, largely fueled by offerings tied to Bitcoin, Ethereum, and more recently Solana and XRP, has reinforced the industry’s belief that many investors prefer to purchase crypto via regulated structures they are accustomed to using for stocks and bonds.

In particular, Schwab Asset Management recently discovered that 45% of ETF investors intend to invest in crypto ETFs, a statistic that now parallels interest in bond ETFs.

Nevertheless, with the SEC anticipated to approve over 100 additional crypto ETFs next year, wealth managers encounter a new dilemma. This influx of products shifts their focus from a straightforward “own Bitcoin or not” question to selecting which of the numerous single-asset options may lead the next cycle.

In a recent interview, Bitwise Chief Investment Officer Matt Hougan highlighted this challenge, noting that many traditional investors lack strong opinions on decentralization or the debate of “Ethereum versus Solana,” and are instead seeking broad market exposure.

However, achieving this broader exposure has become increasingly challenging as the range of available products expands from a few prominent Bitcoin ETFs to a crowded array of narrowly focused options that require a level of due diligence that many advisory platforms aren’t equipped to manage.

The crypto index solution

Market analysts anticipate that this growing complexity of single-asset choices will drive investors toward crypto index ETPs, which consolidate various tokens into a single listed security.

This category received significant traction in September when Grayscale launched the Grayscale CoinDesk Crypto 5 ETF, touted as the first multi-asset crypto fund in the United States.

Since that launch, issuers have introduced Bitwise’s BITW, 21Shares’ FTSE Crypto 10 Index ETF (TTOP) and its ex-Bitcoin variant (TXBC), in addition to competing offerings from Hashdex and Franklin Templeton.

Roxanna Islam, head of sector and industry research at VettaFi, remarked that this evolution mirrors how equity investors often shift from individual stocks to broad index funds as an asset class matures.

She added that the new funds signify a growing preference among advisors for straightforward portfolio construction elements.

Nate Geraci, President of Nova Dius Wealth, agreeing with this sentiment, expressed that he is “highly bullish” on the demand for these baskets as they provide a one-click solution for allocators wanting to avoid the complexities of individual token selections.

The mechanics

Most multi-asset crypto index products tend to hold a quite similar combination of cryptocurrencies.

Their guidelines typically initiate with free-float market capitalization and basic liquidity filters, which naturally position the majority of weight into Bitcoin and ETH, leaving minimal allocations for other tokens.

For example, Grayscale’s Digital Large Cap Fund (GDLC) illustrates this trend. According to its data, approximately three-quarters of its portfolio is allocated to Bitcoin, with around 15% in Ethereum, and the remainder divided into smaller stakes: around 5% in XRP, just under 3% in Solana, and a little over half a percent in Cardano.

Additionally, a holdings comparison compiled by Bloomberg demonstrates the systematic nature of these funds’ holdings.

Analyzing six principal crypto baskets, which include products from Grayscale, Bitwise, and Hashdex, reveals that Solana and Cardano are present in every lineup.

Cardano’s consistent presence across all funds is noteworthy, given its absence of a dedicated US spot ETF and its underperformance compared to higher-profile competitors like Solana and Ethereum in both returns and market perception.

This prevalence in diverse funds can be attributed to its market value and trading depth. According to CryptoSlate’s data, Cardano ranks as the 10th-largest crypto asset by market capitalization, boasting over $13 billion.

This status allows the token to capture a steady, albeit small, share of passive flows, even as market focus shifts elsewhere.

The challenges

While a single-ticker crypto index fund presents a simpler option for investors, this often comes at a higher cost.

For comparison, many of these products levy fees exceeding 0.5% annually, in contrast to approximately 0.25% on spot Bitcoin ETFs and mere fractions of a percent on broad equity indices.

This fee difference essentially represents the cost of handing over rebalancing responsibilities, and rebalancing in digital-asset markets is seldom without friction.

Liquidity tends to diminish quickly once a portfolio ventures beyond the top three or four tokens, and index providers disclose both their methodologies and review timelines.

This transparency allows professional traders to anticipate when funds will need to buy or sell their holdings. Such predictability enables traders to position themselves accordingly, leading index vehicles to acquire strength and sell weakness in order to remain aligned with their benchmarks.

Moreover, the formation of these baskets generates a risk profile that may not align with the expectations many advisors have of equity indices.

Typically, investors assume that a diversified portfolio offers more safety than a concentrated position; however, historical data often reveals that Bitcoin shows lower volatility compared to smart-contract platforms like Ethereum and Solana.

Thus, as the majority of large-cap crypto indices are market-cap weighted, Bitcoin continues to dominate most of the exposure. Consequently, minor allocations to Ethereum, Solana, and other tokens increase volatility rather than providing a defensive cushion.

In bullish markets, this blend can enable a basket to outperform a Bitcoin-only holding; however, during bearish periods, it may cause the index product to decline more rapidly than its underlying asset.

What should we expect in 2026?

Although the current trend leans toward individual “winners,” the 2026 pipeline indicates that issuers are optimistic behavior will shift.

Bloomberg Intelligence ETF analyst James Seyffart anticipates that crypto index ETPs will emerge as a primary category for asset accumulation next year.

Given this, if US crypto ETF flows in 2026 replicate this year’s pace, which has already surpassed $47 billion in net inflows according to CoinShares, the CryptoSlate model estimates that a shift from single-stock selections to diversified beta could channel between 2% and 10% of that total into index products.

Based on this projection, the anticipated range for crypto index ETF inflows appears as follows:

Islam posits that this transition is necessary, stating:

“We will potentially see more inflows into crypto index ETFs as the number of crypto products becomes too overwhelming to easily perform comparative due diligence.”

In that context, the top performers of 2026 are likely to be the funds that secure placements within major advisory firms’ model portfolios, where allocations become habitual and flows systematic.