In the latest issue of Crypto for Advisors, Patrick Murphy from Eightcap shares insights on the evolution of cryptocurrency as an asset, drawing parallels to the early days of the S&P 500.
Following that, Leo Mindyuk from MLTech addresses queries regarding 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
Like cryptocurrency today, equities in the early 20th century were a nascent and mostly unregulated market, marked by fragmentation and a lack of understanding among the public. The introduction of the S&P 500 in 1957 transformed the financial world by establishing a benchmark for investors, thereby legitimizing equities and facilitating mainstream adoption. Are we witnessing a similar moment for cryptocurrency? With indices set to play a crucial role in its development, it appears so.
The maturation of cryptocurrency along with the growing significance of indices positions them as vital catalysts for broader adoption in the crypto realm. The CoinDesk 20 Index (CD20) serves as a benchmark for the overall crypto market, offering insights and laying the groundwork for products that broaden investment opportunities.
A fragmented and volatile market?
The cryptocurrency landscape is fragmented—a paradox of innovation amid instability. With over 23,000 cryptocurrencies, most experience low trading volume and limited liquidity. This “long tail” includes many projects that never gained traction; projections suggest that over 50% of cryptocurrencies launched since 2021 may no longer exist. A stark highlight is that 1.8 million tokens became “dead coins” in just the first quarter of 2025.
Despite this vast number, trading is heavily concentrated among a handful of leading cryptocurrencies, underscoring the true fragmentation of the market.
High volatility characterizes this fragmentation, illustrated vividly by Bitcoin’s sudden crashes and ascents. Price “pumps” can occur unexpectedly, and paradoxically, the market may remain stagnant despite significant news. Major announcements often lead to illogical price movements, with sudden spikes or drops lacking clear catalysts. This unpredictability highlights how thinly traded and concentrated the market is.
A prime example is the SEC’s approval of Ether (ETH) exchange-traded funds (ETFs) in May 2024. Although a regulatory milestone, ETH’s price remained stable upon announcement, only to surge 15% the following week without any new information. Such delayed and illogical market reactions are prevalent, showcasing how thin liquidity, concentrated holdings, and sentiment-driven trading dominate many segments of the crypto market.
Signs of maturation
Despite its current issues, the crypto market is clearly maturing. Institutional interest is growing, with major financial entities investing, partnering, and developing crypto-oriented products. Regulatory clarity is improving globally as well.
Key regulatory & institutional milestones
- ETF approvals: Initially limited to spot bitcoin and ETH ETFs, approvals now extend to Solana and other cryptocurrencies.
- MiCA regulation: The EU’s Markets in Crypto-Assets (MiCA) framework represents the first comprehensive licensing for crypto in 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 growth in the sector and wider adoption.
- Stablecoin Genius Act: This new U.S. Federal framework about stablecoin issuers aims to clarify regulations, encourage innovation, and protect consumers. Circle’s recent listing on the NYSE, alongside central bank digital currency (USDC) gaining status as the EU’s compliant stablecoin (adopted by exchanges like Coinbase, OKX, and Binance), signifies a crucial point for stablecoins.
Growing stablecoin adoption
Eightcap’s 2025 data reveals stablecoin payments now represent 18 percent of monthly deposits, with Tether being the most common. This trend reflects a broader movement, with stablecoins processing an estimated $27.6 trillion in 2024, exceeding the combined transaction volume of Visa and Mastercard by 7.7 percent.
The role of indices
The contemporary crypto market mirrors the equities market prior to the S&P 500. The emergence of broad-based indices represents a significant advancement.
A call to action
This moment is crucial for the development of cryptocurrency indices that can bring structure to the existing chaos. The CoinDesk 20, now offered through more than 20 investment vehicles worldwide via Eightcap, ML Tech, WisdomTree, and others, demonstrates how indices can deliver clarity, transparency, and diversified exposure to digital assets. The industry must expand on this groundwork, creating even more robust instruments for traders and investors. The complete integration of digital assets into the global financial system is not merely a possibility; it is 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 simplified complexity by introducing structure, benchmarks, and accessibility. Instead of vetting every individual stock, investors could tap into a broad, rules-based proxy for U.S. stock market exposure, thereby unlocking trillions in capital inflows. The current crypto landscape remains fragmented and convoluted, necessitating a similar evolution. Institutional allocators and many retail investors aren’t merely asking, “Which token should I own?” — they seek ways to access diversified, well-balanced exposure within this asset class. Index products are essential for scaling the investability of crypto. It’s about establishing exposure through established, systematic frameworks that meet compliance, liquidity, and transparency standards. The rise of crypto-native indices and systematic strategy frameworks is the critical evolution from speculation to scalable allocation.
Q: How does the lack of crypto indices impede adoption by institutional allocators and financial advisors?
A: Indices are fundamental tools for allocation, benchmarking, and communication. Their absence complicates the ability of institutional investors or advisors to justify crypto exposure within traditional asset allocation models, as they lack a performance, volatility, and risk reference point. Advisors cannot model it; CIOs find it hard to underwrite; committees hesitate to approve it. This friction affects investment, compliance, and operational layers. Indices are essential for translating crypto from an abstract opportunity into a clearly defined, investable asset.
Q: How does indexification of crypto reshape the opportunity set for both allocators and systematic strategies?
A: Indices form the essential structure that allocators and quant managers require. For institutions, they provide benchmarkable exposures that can be measured, monitored, and validated within conventional investment frameworks. For systematic strategies, indices serve as components for factor models, hedging approaches, or allocation indicators. However, to fully realize this potential, participants need an institutional wealth management infrastructure: real-time P&L and risk dashboards, customizable strategy access via API, and secure, non-custodial deployment across leading exchanges. With the right wealth platform, indices evolve from passive benchmarks into dynamic building materials: ready for allocation, systematic trading, and integration into institutional quant operations.
