Crypto markets are fast, volatile, and full of noise.
Many new and passive investors feel like picking separate coins is gambling. That’s where crypto index investing comes in. This strategy is akin to the stock market’s way with ETFs or mutual funds. It allows a trader to ride the waves of the market without the risk of a single token.
What Is Crypto Index Investing?
A crypto index does just like a conventional stock market index (like the S&P 500) does—it bundles together multiple assets into a single investment product. These indices can be thematic i.e. DeFi, AI, sector-based or market-cap weighted. The result? Wider exposure with lower risk than having only 1 or 2 coins.
Top Crypto Index Platforms
Crypto index products are offered by numerous DeFi and centralized platforms. Among the leading players:
- Index Coop provides well-known indices, including the DeFi Pulse Index, ETH 2x Flexible Leverage Index, and Bankless BED Index.
- Phuture lets you set up and put your money in customizable indexes, including theme-based portfolios.
- PieDAO med seves productes indexats estem parlant d’un producte que es un DEFI+S y BCP.
- The company in question is Cryptex, which created TCAP, which tracks the total market cap of crypto.
Why Index Investing Works
- Diversifying your assets decreases the risk of losing all your money on one coin.
- Keeping things simple: You don’t have to time the market or investigate the project in detail.
- Make a long-term bet on AI, infrastructure, DeFi, and other thematic narratives without picking winners.
- Reduced Fees: Barriers to entry are low, as many are non-custodial platforms.
Performance Check: Indexes vs. BTC/ETH
During the bull market of 2021, some thematic indexes outperformed Bitcoin and Ethereum. For instance:
- For months during DeFi Summer, the DPI beat the performance of the ETH.
- AI-related stocks soared in price in early 2023, while the AI narrative gained significant traction.
- Indexes such as TCAP, which weigh stock contributions by market capitalization, moved with the market.
Certainly, during slumps, indexes may also cushion losses compared to having highly risky altcoins.
How Much Active vs. Passive Is Right?
Index investing doesn’t have to mean going fully passive. Many investors combine:
- The core index position should ideally be in the 60–80% range with a DeFi or market cap index for long-term exposure.
- Speculative bets on individual projects or coins (20–40%): Satellite holdings.
The core-satellite model combines stability with upside.
Bonus: Create Your Own Index With DeFi
Feeling more hands-on? You can build a DIY crypto index using tools like:
- Adjust your investments using Zapper or DeFi Saver.
- ERC-20 tokens in multisig or wallet tracker stored in manual baskets.
- Portfolio managers based on smart contracts (e.g., Enzyme Finance).
You choose your own weighting, tokens, and rebalance frequency, which is great for control freaks.
Conclusion
Investing in crypto indexes is an intelligent option for new users. It is the easiest choice for long-term believers. It is an easy go-to tool for active investors. In a world of hype and volatility, the indexes bring something rare in crypto: infrastructure simplicity and strategy.
