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This week's newsletter features insights from Glenn Williams Jr. of ProShares, who discusses the growing trend among investors to look beyond bitcoin and ether as they manage concentration risk through multi-asset indices.
Happy reading!
The Shift in Crypto Investment Focus
The cryptocurrency landscape is expanding rapidly, with new technologies and networks emerging daily. While bitcoin and ether are still the most recognized crypto assets, they are only two among a vast array of cryptocurrencies. Currently, TradingView estimates the total crypto market cap at around $2.5 trillion, showcasing diverse applications and uses throughout the crypto ecosystem. For investors, concentrating on just a few cryptocurrencies may lead to missed opportunities in the broader market.
This distinction is becoming increasingly important as the crypto market evolves. Bitcoin has established itself primarily as a store of value, while ether is closely linked to smart contracts and decentralized applications. However, numerous other networks are emerging, focusing on various functionalities such as faster transaction settlements, decentralized finance, interoperability, and data infrastructure. Thus, the crypto market is evolving into a diverse array of technologies and use cases rather than merely alternatives to bitcoin.
Market leadership is also subject to change over time. Historical trends show that periods dominated by bitcoin can eventually shift to broader engagement across various cryptocurrencies. This doesn't guarantee that smaller cryptocurrencies will outperform bitcoin or ether but suggests that portfolios heavily invested in these two may lack exposure if investor interest shifts to other assets.
Mitigating Concentration Risk with Multi-Asset Indices
The CoinDesk 20 Index was created to provide a diversified approach to the crypto asset class through a rules-based index comprising 20 of the largest and most liquid cryptocurrencies. This index intentionally excludes memecoins, stablecoins, and certain other crypto assets, and it adjusts quarterly to reflect market changes.
Crucially, the index aims not only to offer broader market exposure but also to reduce concentration in its largest components. Given that bitcoin and ether command a significant portion of the total crypto market cap, a traditional market-cap-weighted index would be heavily influenced by these assets.
The CoinDesk 20 Index employs a modified market capitalization weighting system to counterbalance this concentration. It imposes:
· 30% cap on the largest constituent
· 20% cap on all other constituents
These limits ensure that no single crypto asset can dominate the index, allowing other significant cryptocurrencies to have a more substantial presence.
Left: Source: CoinDesk, as of June 30, 2026. Right: ProShares hypothetical calculation using the CoinDesk 20 Index constituents, weighted by market capitalization without the index caps, as of June 30, 2026. For illustrative purposes only.
Without these caps, the index would primarily mirror the performance of bitcoin and ether. By limiting the concentration of larger assets, the CoinDesk 20 Index fosters a more balanced exposure across a wider array of cryptocurrencies.
Practical considerations also play a role. Achieving similar exposure directly would necessitate purchasing, securing, and periodically rebalancing a considerable number of individual crypto assets. While improvements have been made in crypto custody infrastructure, managing multiple cryptocurrencies can still involve navigating various exchanges, wallets, and custody arrangements. An index-based approach can streamline this process while preserving exposure to market changes.
The regulatory landscape for digital assets is continually evolving, with regulators working towards clearer guidelines on how crypto assets are issued, traded, and held. This increased clarity could facilitate the development of additional segments of the crypto ecosystem within traditional financial markets.
This evolution is significant, as the next phase of crypto adoption may differ from previous ones. Bitcoin and ether could maintain their status as the largest assets while new networks and applications continue to emerge. It remains uncertain which technologies will achieve the most significant adoption, making diversification a prudent strategy for gaining exposure without needing to predict future leaders.
Exploring options beyond bitcoin and ether does not mean abandoning them. The CoinDesk 20 Index still holds significant positions in both assets while providing a broader market exposure.
- Glenn Williams Jr., crypto markets analyst, ProShares
Ask an Expert
Why is diversification important in crypto?
Bitcoin is merely the starting point. With over 20,000 cryptocurrencies actively tracked and traded, bitcoin currently holds a dominance of about 60%. For institutional investors, diversification is essential for managing volatility and seizing broader opportunities. Indices provide an effective means of monitoring asset class performance, while products like exchange-traded funds (ETFs) and separately managed accounts (SMAs) enable simultaneous exposure to multiple cryptocurrencies.
What trends are you observing among institutional investors in digital assets?
Institutional investors are increasingly participating in the market, transitioning digital assets from a niche investment to a significant asset class. A survey conducted by EY-Parthenon and Coinbase in 2026, involving over 350 institutional investors, revealed that nearly three-quarters (73%) intended to increase their crypto allocations in 2026, and 74% anticipated a rise in crypto prices over the next year. The survey also indicated that regulated products have become the preferred entry point for institutional crypto exposure, with two-thirds (66%) of respondents already holding spot crypto ETFs and ETPs, and 81% expressing a preference for accessing spot crypto through registered vehicles.
What broad benchmarks exist in the crypto space?
Numerous multi-asset indices are emerging for crypto. The CoinDesk 20 Index captures the performance of leading digital assets, while the CoinDesk 5 Index tracks the five largest constituents of the CoinDesk 20. The CoinDesk 20 was designed for liquidity and is available in 20 investment vehicles globally, including the ProShares CoinDesk 20 Crypto ETF (KRYP) and the WisdomTree Physical CoinDesk 20 ETP (WCRP). CoinDesk 5 underlies the first U.S. multi-crypto ETP, the Grayscale CoinDesk Crypto 5 ETF (GDLC). CoinDesk Data & Indices also offers the CoinDesk 80, CoinDesk 100, CoinDesk Memecoin Index, and hundreds of BMR-compliant indices to monitor, invest, and trade within the expanding crypto landscape.
- Kim Klemballa, CoinDesk Data & Indices
Keep Reading
- The CLARITY Act fails to progress in the Senate, lacking the 60 votes required to advance.
- Canada’s bank regulator, the Office of the Superintendent of Financial Institutions (OSFI), states that tokenized deposits are subject to the same regulations as conventional deposits.
- The UK House of Lords approves an amendment mandating the Treasury to publish a national digital asset strategy within a year, covering crypto, stablecoins, and tokenized securities.
For more news, stay updated with the latest crypto developments from coindesk.com and market insights from coindesk.com/institutions.
This information is not intended as investment advice. Any forward-looking statements made herein are based on the current expectations of ProShare Advisors LLC. The accuracy of actual results and developments against these expectations is subject to various risks and uncertainties, including general economic conditions, market fluctuations, changes in laws or regulations, and other global economic and political developments. ProShare Advisors LLC assumes no obligation to update or revise any forward-looking statements, regardless of new information or future events. Investing carries risks, including the potential loss of principal.Crypto for AdvisorsLatest Crypto News
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The Definitive Stablecoin Landscape Series: Asia Pacific
The Definitive Stablecoin Landscape Series: Asia Pacific
As stablecoins move into regulated finance, APAC is becoming a key proving ground. This report maps the region’s rules, use cases, and RLUSD’s role.
By CoinDesk ResearchSep 15, 2026Commissioned byRippleAs stablecoins transition into regulated finance, APAC is establishing itself as a critical testing ground. This report outlines the region’s regulations, use cases, and the role of RLUSD.
Why it matters:
As stablecoins move into regulated finance, APAC is becoming a key proving ground. This report maps the region’s rules, use cases, and RLUSD’s role.
View Full ReportMore From CoinDesk Indices