What benefits do crypto indices offer during a bear market?
Market indicators like the Dow Jones Industrial Average (DJIA), established over a century ago, and the later S&P 500, remain relevant today, serving as tools for macroeconomic assessment and providing a comprehensive approach to analysis. Derivative instruments based on these indices, such as institutional ETFs and crypto indices trading, allow for flexible portfolio construction and asset balancing across sectors and directions. With the advancement of blockchain and programmable tokens, indices have gained new functionality and accessibility in Web3.
In this article, ForkLog discusses the ups and downs of the first aggregated stocks, platforms for crypto indices, "NFT containers" for creating investment portfolios independently, and strategies for automated returns in a bear market.
Historical Calculations
Over the past decade, the cryptocurrency market has undergone significant changes: many patterns, such as the four-year cycle and phases of liquidity flowing from Bitcoin to Ethereum and then to less capital-intensive assets, are no longer effective.
By early 2026, Bitcoin joined the prolonged decline in the value of small-cap crypto assets, which had been suffering for some time. At that moment, finding attractive projects required investors to adopt a special approach and deepen their understanding of market behavior and tools, one of which was indicators from traditional finance, created over a century ago.
In the late 19th century, employees of Dow Jones & Company realized they were spending too much time on daily stock reports of major companies.
In 1884, Charles Dow, a future co-founder of The Wall Street Journal, introduced the Dow Jones Transportation Average, reflecting the state of the railroad industry—the backbone of the economy at that time.
In 1896, in collaboration with Edward Jones, he released the expanded DJIA, which averaged the stock prices of 12 leading companies. By 1928, the number had grown to 30 "blue-chip" stocks, a standard that remains today. The only organization that had been on the list since its inception, General Electric, left it in 2018, marking the end of the industrial era.
After the DJIA strengthened the foundations of market analytics, the financial world recognized the need for more precise and diversified tools.
In 1950, the Nikkei 225 was launched, symbolizing Japan's economic miracle and the financial bubble of the late 1980s. It included 225 of the largest companies across more than 30 sectors of the economy.
In 1957, Standard & Poor’s launched the revolutionary S&P 500, representing all major sectors of the economy. Its main distinction was a new calculation method based on market capitalization rather than stock prices. This weighted approach later became standard for all popular benchmarks. Today, the S&P 500 is considered a barometer of the U.S. stock market and a benchmark for most investment funds worldwide.
In 1971, the NASDAQ Composite was introduced, encompassing over 3,000 organizations, primarily from the rapidly growing technology sector.
In the 1980s, the Russell 2000 was released to track small-cap companies, the "elite" NASDAQ 100 excluded banks and financial corporations, and the German DAX was introduced. Later, in 1998, the "set of giants" from the EU joined under the ticker EURO STOXX 50.
Daily charts of futures contracts on popular indices (03.03.2026). Source: Finviz.
Until the 1970s, indicators served as benchmarks and could not be purchased directly. In 1975, entrepreneur John Bogle founded the investment company Vanguard and created the first index fund. Initially, Wall Street viewed the idea of "buying everything at once" with irony, but later financiers began using institutional ETFs based on aggregated metrics, which were supplemented by derivatives based on futures and options. The first ETF, SPDR S&P 500, was launched in 1993.
Strategies and Opportunities
Investors seeking to diversify their portfolios by sectors and regions have appreciated new solutions. However, many have still been let down by shortsighted calculations in the pursuit of profit.
For example, it took the Nikkei 225 34 years to surpass its historical record set in 1989. At that time, the Japanese market was at its peak, and many believed it would outpace the American market. Ultimately, an entire generation of investors who bought the index retired with losses.
The situation with NASDAQ during the "dot-com bubble" in the 2000s and the incorrect risk analysis of mortgage derivatives during the 2008 crisis provided traders with bitter experiences. In both cases, the figures in reports, transferred into charting models, did not reflect reality. Inflated metrics of unprofitable internet companies and artificially high ratings of credit organizations in the real estate sector triggered a snowball effect.
Today’s market is rife with alarming signals related to breakthrough technologies.
According to Slickcharts, on March 3, 2026, the concentration of the top 10 companies in the S&P 500 was approximately 36.6%.
Top 10 components of the S&P 500 by weight in the index as of March 3, 2026. Source: Slickcharts.
This AI-driven metric may create the illusion of healthy growth, but if these giants encounter difficulties, the index will not be helped by the overwhelming majority of other participants. According to Tema ETFs, in 2000, at the peak of the "dot-com bubble," this figure did not exceed 27.1%.
The concentration problem of the top 10 companies in the S&P 500. Source: Tema ETFs.
Instruments allow investors to respond quickly during periods of high volatility. For instance, consider the onset of military actions in Iran.
On February 28, 2026, a joint military operation by the U.S. and Israel against the leadership of the IRGC began. Given that these events were occurring in a region that is the largest producer of oil and gas globally, financial analysts anticipated a rise in the energy sector even before the markets opened on March 2.
At the beginning of the week, during retaliatory measures, the IRGC launched missiles and kamikaze drones at countries in the Persian Gulf. In particular, the world’s largest refinery owned by Saudi Aramco was damaged, forcing the company to halt operations completely, significantly impacting fuel supplies.
Monthly chart of Saudi Aramco shares (03.03.2026). Source: Yahoo Finance.
Considering the closure of the Strait of Hormuz—a crucial artery for transporting energy resources—the stock market reacted predictably. The shares of leading companies began to decline in contrast to the rise of the U.S. dollar and oil and gas prices.
In this situation, indices allowed traders to avoid guessing which specific energy company’s stock would rise faster due to raw material shortages and instead select the corresponding aggregate asset.
Brent crude oil, extracted from the sea, serves as the benchmark for all "black gold" transported via tankers through the strait. Therefore, any news about vessel blockades or strikes on refineries instantly spikes its price.
Hourly charts of popular futures contracts on energy sector indices, including Brent crude oil (03.03.2026). Source: Finviz.
On March 3, 2026, Brent prices hovered around $80–85, having risen 17% since the conflict in the Middle East escalated. Due to the cessation of Qatari LNG and Saudi refinery supplies, analysts predicted a rise above $100 in the coming days.
Given all the above inputs, let’s consider a hedging portfolio for a short-term investor assembled on March 2, 2026. Its delta neutrality is maintained with two equal parts in case of escalation and peaceful resolution.
A simplified hypothetical portfolio to illustrate the method:
- in case of peaceful resolution (50%). S&P 500, NASDAQ — 35% (growth during de-escalation and return to technology); DAX, Nikkei — 10% (in case of global logistics recovery); Bitcoin — 5%;
- in case of conflict escalation (50%). Gold — 20%; Brent oil index — 15%; U.S. dollar index (DXY) — 10% (growth amid strength and a shift towards U.S. energy); Bitcoin — 5%.
This asset combination would yield a profit of approximately 3.3%.
This example demonstrates the potential of using indices. In real conditions, strategy creation can take various forms and combine an unlimited number of positions in custom percentages. Rebalancing weights upon reaching certain values would also play a crucial role in final calculations.
Cryptocurrency in the Game
In 2013, Bitcoin had already caught the attention of TradFi participants. At that time, pioneers attempted to apply traditional mechanics to new digital assets. The first crypto index in history was the CoinDesk Bitcoin Price Index (XBX), launched that same year.
When Bitcoin was priced at $100, CoinDesk launched the XBX to provide the market with a weighted price benchmark collected from several of the largest exchanges at the time (Mt. Gox, Bitstamp, and CampBX).
A year later, the Winklevoss twins, co-founders of the Gemini exchange, introduced Winkdex (Winklevoss Bitcoin Index). It used a volume-weighted formula to protect quotes from manipulation on smaller exchanges and was aimed at professionals.
In May 2015, the NYSE Bitcoin Index (NYXBT) was launched, marking legal and psychological recognition of the asset. The exchange applied the same strict standards to Bitcoin as it did to S&P 500 stocks, prompting institutional investors to view cryptocurrency as a serious instrument for the first time.
Ten years later, the concept of crypto indices has evolved significantly: expanding functionality, they have become a cornerstone for Web3 enthusiasts.
CoinDesk 20 (CD20), launched in January 2024, responded to the demand from funds needing not just a list of coins but a real liquid product. The model was equipped with the ability to select the largest assets using a strict filtering methodology.
A year later, CoinMarketCap introduced CMC20 for investments. Unlike earlier versions, it became not just a statistical indicator but a fully tradable token on the blockchain. It is listed on DEX platforms like PancakeSwap and Aster.
The CMC20 tracks the 20 largest cryptocurrencies, filtering out stablecoins and wrapped assets. Thanks to automatic monthly rebalancing via smart contracts, the token allows for purchasing "the entire market" in a single transaction.
In January 2026, ARK Invest founder Cathie Wood announced the creation of two index funds based on CD20. One will focus on tracking CoinDesk 20, while the other, delta-neutral, will combine long futures on the index with short positions on Bitcoin.
This trend has been supported by several companies that have made such instruments their key feature: Glider, Cryptoindex, Index Coop, GMCI, and Phuture. They offer portfolios of sector leaders: RWA, L1 networks, AI, DeFi, and meme coins.
Top 10 crypto index platforms by total value locked (TVL) as of March 4, 2026. Source: Defi Llama.
According to SoSoValue's dashboard, the most profitable aggregated solution has been ssiCeFi, focused on crypto exchange tokens (BNB, CRO, MNT, ASTER). At the time of writing, the tool's annual yield compared to Bitcoin was over 39%.
SoSoValue crypto indices chart. Source: SoSoValue.
In light of the negative market situation, the only asset that showed a profit over the month was ssiRWA, which includes tokens for real asset tokenization (SKY, ONDO, PENDLE). At the time of writing, it had grown by about 4%.
Targeting institutional investors, Kaiko became the official administrator of benchmarks by 2026, operating under EU standards. Its products focus on liquidity and compliance. The main families include:
- "blue chips" — flagship indicators from Kaiko. They track the most reliable and largest assets, passing through strict filters. Kaiko 5 (KT5) — a conservative basket of five components (BTC, ETH, and three top altcoins); Kaiko 10 (KT10) — a direct competitor to CoinDesk 20 but with stricter requirements for the exchanges from which data is sourced; Kaiko 15 (KT15) — an expanded set for those wanting to capture more "mid-cap" instruments;
- thematic specialized indices. One of them is the Kaiko Tokenization Index (KSTKNZ), which tracks projects related to RWA;
- regional indicators. Kaiko Eagle was created specifically for the U.S. ETF provider market. It only considers assets and platforms that fully comply with U.S. regulatory requirements.
Over the past year, the most profitable in the lineup has been the Kaiko AI Index (KSAI). It outperformed Bitcoin's annual dynamics by approximately 18.3%.
Components of the KSAI index. Source: Kaiko.
The variety of new Web3 solutions not only helps navigate the bear phase profitably but also allows for the storage of an entire asset set in a single token in the form of NFTs.
Wrapped versions of NFTs—wNFTs (Wrapped NFTs)—have transformed what was once a niche of digital images into dynamic "smart wallets." They represent the pinnacle of programmable finance, requiring advanced knowledge but offering a high level of decentralization and investment experience in return.
Some protocols allow for "wrapping" any cryptocurrency—ranging from BTC and Ethereum to their staked versions—enabling the reuse of coins in DeFi mechanics.
For instance, using the Envelop platform, an entire investment portfolio can be formed within one wNFT, with the ability to unlock it over time and transfer or sell it to others.
Another technology—vaults—allows assets in a container not just to sit idle but to generate income.
The Solv Protocol utilizes the semi-fungible token (SFT) standard ERC-3525 to create financial "vouchers" representing complex positions in smart contracts.
By depositing an asset like BTC, one can receive a liquid token in return that accumulates income in real-time from a combination of different sector strategies (staking, RWA). The programmed index can be resold along with the right to future profits.
In 2026, crypto indices and programmable asset baskets have evolved from simple analytical metrics into a powerful shield against market turbulence. In an environment where old models cease to work, aggregated tools allow for risk hedging.
Utilizing approaches validated over centuries in the stock market, combined with the flexibility of Web3 protocols, enables investors to bet on entire sectors—from AI to RWA—while preserving capital even in the "red zone."
However, technology does not guarantee success. The primary task for investors remains the combination of various proven methods of analysis and risk management.