That distinction has become increasingly important as the crypto market matures. Bitcoin has largely established itself as the market’s primary store-of-value asset, while ether remains closely associated with smart contracts and decentralized applications. Beyond those two assets, however, networks have emerged targeting everything from faster transaction settlement and decentralized finance to interoperability, data infrastructure and other applications. Put differently, the crypto market is increasingly becoming a collection of different technologies and use cases rather than simply a collection of alternatives to bitcoin.
Those differences also mean that market leadership can change over time. As we have seen during previous crypto cycles, periods dominated by bitcoin performance can eventually give way to broader participation across the asset class. That does not necessarily mean that smaller cryptocurrencies will outperform bitcoin or ether. It does, however, mean that a portfolio concentrated in the two largest assets may have limited exposure if investor interest broadens elsewhere.
How a multi-asset index addresses concentration in crypto
The CoinDesk 20 Index was designed to provide diversified exposure to the crypto asset class through a rules-based index of 20 of the largest and most liquid cryptocurrencies. The index excludes memecoins, stablecoins and certain other crypto assets and it reconstitutes quarterly to capture changes in the market.