In today’s “Crypto for Advisors” newsletter, Dovile SilenskyteDirector of Digital Assets Research at Wisdomtree, breaks down crypto indices, what they are and discusses key considerations.
Then, in “Ask an expert,” Eric Tomasewskia financial advisor at Verde Capital Management, answers questions for advisors about crypto portfolio construction using indices.
Crypto’s Quiet Revolution: Index Design
As institutions build exposure to digital assets, a simple fact is becoming clear: in crypto, the method is the product.
Behind each index lies an invisible architecture – how assets are selected, how they are weighted, how often they are rebalanced, and which data feeds they are subject to. These design choices don’t just shape performance. They define trust, transparency, and product flexibility.
An index built on reliable data, verified prices, and transparent management becomes more than a benchmark. It becomes infrastructure. The line between a hypothetical token basket and an index-grade index is drawn by the integrity of the design.
The new rules of index construction
Crypto does not follow the same data logic as equities. Supply may be staked or locked. Liquidity lives in dozens of places. Regulations can redraw the map overnight.
Comparison Supply Comparison
Source: Artemis Terminal, Wisdomtree. 12 November 2025. Historical performance is not an indication of future performance, and any investment may decline in value.
This means that building a crypto index is part data engineering, part management design. A well-developed benchmark is not just a performance tracker. This is an investment framework.
It all starts with intention. Are you targeting broad market exposure or a specific narrative such as decentralized finance (defi) or layer 1 innovation? That desire shapes the token’s eligible universe, liquidity thresholds, and grief rebalancing. Go too wide, and you get noise; Too narrow, and you’re thinking, not benchmarking.
Strong indexes enforce discipline. Liquidity and size filters to prevent ghost tokens, custody and exchange screens to ensure institutional access, and governance filters to exclude obscure or security-like assets. In crypto, eligibility rules are the new gatekeepers as they separate benchmark investors from theoretical ones.
Weight, maintenance, and market truth
Weighting tells the story of market structure. A market-cap strategy features dominance—Bitcoin and Ether often command 80 to 90% of a market-weighted index, while equal or capped weighting gives the protocol much less room to shine.
Side by side comparison of Coindesk 5 and Coindesk 5 equal weight indices
Source: Coindesk Indeks announced the final October 2025 restructuring results for the Coindesk Index family 20. 3 October 2025.
But weighting alone does not make an index future-proof. Maintenance is.
Crypto Trades Nonstop. Tokens fork, switch, and sometimes disappear overnight. Quarterly rebalance, liquidity tests, and concentration caps are not optional. These are survival tools. They ensure that an index remains investable and relevant as the underlying shape-shifts in real time.
The institutional test
Index design is now the hidden frontier of the institutional crypto era. This is where technical accuracy meets investor confidence. Rules-based, transparent indices, in contrast, provide the basis for robust exchange-traded products (ETPs) that investors can trust.
For a deeper dive, read the full paper: Market Insights: Crypto Index Construction.
Important information
This material has been prepared by Wisdomtree and its affiliates and is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. The opinions expressed are as of the date of manufacture and may change as subsequent conditions vary. The information and opinions contained in this material are derived from proprietary and non-proprietary sources. Accordingly, no warranty of accuracy or reliability is given and no liability arising in any other way for errors and omissions (including liability to any person by reason of negligence) is accepted by Wisdomtree, or any affiliate, or any of their officers, employees or agents. Reliance on information in this material is at the sole discretion of the reader. Past performance is not a reliable indicator of future performance.
– Dovile Silenskyte, Director, Digital Assets Research, Wisdomtree
Ask an expert
Q: What makes a crypto index meaningfully diversified when everything feels correlated?
A: Crypto correlation tends to spike during stress events, but the dispersion can be huge across cycles. A meaningful crypto index will avoid being overly cautious of anything with the largest market cap.
We are looking for:
1. Different economic models or categories such as Layer 1S (L1s), Layer 2S (L2S), Liquid Staking, Restaking, Real-World Assets, and Decentralized Exchanges (DEX)
2. Sustainable Token Emissions
3. Real Fee Capture (Revenue)
The objective is not necessary to eliminate volatility. This avoids a portfolio that inadvertently follows a single narrative.
Q: Should Bitcoin still be a weight in a diversified crypto portfolio?
A: Yes. Bitcoin is the only digital asset with currency-like characteristics, predictable issuance, and no-dilution venture style.
For most investors, Bitcoin serves as a control-control asset within crypto, not a risk asset. We typically anchor portfolios with 50 to 70 percent BTC, depending on risk tolerance. From there, we build satellite positions around thematic growth.
Q: What is a reasonable rebalancing schedule for a crypto model portfolio?
A: Quarterly usually works. This is often enough to capture the spread, but not so often that you overtrade noise. For advisors managing through L1 advisors, safe, or custodial platforms, rebalancing when tokens cross defined bands (EG, BTC deviate 10% from target weight). Discipline removes emotion from a highly emotional class of possessions.
Q: Where do you see the next major move in index construction?
A: I see the industry moving from asset-based indexes to cash flow-based indexes.
Instead of “Top 10 assets by size,” we can see indices weighted by:
- Protocol Income
- yield efficiency
- Validator Economics
- restoring demand
- Growth of RWA collateral
This reflects the evolution from simple market-cap indices to smart beta in equities.
– Eric Tomasewzki, financial advisor, Verde Capital Management
Keep reading
- The endowment of Harvard University revealed a $443 million stake In BlackRock’s Ishares Bitcoin Trust (IBIT), making it the fund’s largest known equity position, worth 20%.
- The US Office of the Comptroller of the Currency has issued a guide for the banks they can hold Cryptocurrency For the purpose of paying blockchain transaction fees.
- New Hampshire approves first-of-its-kind $100m Bitcoin backed by Municipal Bonds.
