Hashdex: Diversification as a compass: The benefits of Crypto Index Investing

When investors think about crypto, the discussion usually starts with Bitcoin. As the first digital asset¹, it established the blockchain's potential and remains the benchmark of the asset class. Yet, just as the internet rapidly grew beyond its early pioneers, crypto has expanded far beyond Bitcoin.

New networks are being built to process transactions faster, support digital payments, and enable applications that can run without traditional intermediaries. Together, these innovations represent the "infrastructure phase" of crypto - laying the groundwork for broader use cases in finance, commerce, and technology. Bitcoin opened the door, but the opportunity now extends across a wide spectrum of possibilities.

History underscores this reality. In 1999, investors faced the same challenge with internet equities: the technology was clearly transforma-tive, but leadership was uncertain. Of the ten largest companies in the Nasdaq 100 at the time, only Microsoft remains in the top tier today.² This pattern extends beyond tech.

The Technology Uncertainty³

This table illustrates the change in market leadership between 2004 and 2024, underscoring the difficulty of long-term stock picking in technology sectors.

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Notes from the CIO

Crypto index investing arrives in the US

The evolution of crypto index investing. When we launched the world’s first crypto index ETF in 2021, many were skeptical that index investing could play a meaningful role in crypto.

At that time, the market was dominated by direct Bitcoin products or active funds attempting to time market cycles. But history tells us that when new asset classes emerge, index-based products often become the foundational building blocks for portfolio allocation. Think about the rise of equity markets in the mid-20th century. Investors initially focused on individual company shares, but over time, broad market indexes like the Dow Jones Industrial Average and the S&P 500 became the standard benchmarks. Index-based ETFs made them accessible, liquid, and low-cost, catalyzing the growth of modern portfolio management.

Read the Notes from the CIO

1 On October 31, 2008, Satoshi Nakamoto published the whitepaper "Bitcoin: A Peer-to-Peer Electronic Cash System" The Bitcoin network was officially launched on January 3, 2009. Bitcoin's launch date can be confirmed by viewing its genesis block on a block explorer like mempool.space. To find it, simply search for block number 0.

2 Nasdaq, Index Research October 2024. Third-party data or research is provided for informational purposes only and has not been independently verified. Hashdex does not guarantee its accuracy or completeness, and it should not be relied upon as the sole basis for investment decisions.

3 Adapted from Nasdaq, Index Research October 2024. For illustrative purposes only. Dell Market Cap Data reflects the company’s annual 10-K filing and market capitalization as of 7/30/2004. Both share classes of Google stock are included in the top 10 holdings table for 2014 and 2024: Alphabet Class A (GOOGL) and Alphabet Class C (GOOG). The blue color is used to highlight the constituents that weren’t in the top 10 holdings in the prior decade. As of September 20, 2025. Author: Samir Kerbage - Chief Investment Officer