7 Best Crypto Index Funds for 2023
Disclaimer: The Industry Talk section features insights from crypto industry players and is not a part of the editorial content of Cryptonews.com.
Crypto index funds are tasked with tracking a basket of digital currencies. This enables investors to gain exposure to a diversified portfolio of cryptocurrencies through a single investment.
In this guide, we explore the 7 best crypto index funds in the market.
7 Best Cryptocurrency Index Funds to Buy 2023
The 7 best crypto index funds are listed below:
- Dash 2 Trade Crypto Presale - Better Alternative to Crypto Index Funds
- Bitwise 10 Crypto Index Fund - Weight Index Fund of the Top 10 Cryptos by Market Cap
- eToro Smart Portfolios - Choose From 14 Professionally-Managed Crypto Smart Portfolios
- Galaxy Crypto Index Fund - Invest in 12 Different Cryptocurrencies With Monthly Rebalancing
- Nasdaq Crypto Index Fund - Diversified Basket of Market Cap Weighted Cryptocurrencies
- Fidelity Crypto Industry and Digital Payments Index - Diversified Portfolio of Crypto-Centric Stocks
- Bitwise DeFi Crypto Index Fund - Invest in the Future of Decentralized Finance
Each crypto index fund will differ in terms of the digital currencies it elects to track, in addition to the weighting and rebalancing strategy utilized.
Therefore, investors can read on to pick the best crypto index fund for their financial goals and tolerance for risk.
Reviewing the Best Crypto Index Funds 2023
As noted above, no two crypto index funds are the same. Each crypto index fund will contain a selected basket of digital currencies at various weights.
Moreover, the chosen cryptocurrencies will often be determined by market capitalization. This means that the crypto index fund will regularly rebalance its tracking benchmark.
Once again, this will vary from one crypto index fund to the next.
1. Crypto Presales - A Better Alternative to Crypto Index Funds
We should start by noting that overall, there are much better alternatives to crypto index funds. From an investment perspective, the vast majority of crypto index funds focus on large-cap digital currencies. Considering that the broader market has been bearish for nearly 12 months, this offers little in the way of upside potential.
Instead, investors might consider crypto presales - which offer early access to newly launched digital currencies. Not only that, but early investors get a discounted price when compared to that of the subsequent exchange listing. In this regard, investors may wish to explore to Dash 2 Trade presale - which in just two weeks has already raised more than $4 million.
What is Dash 2 Trade?
Dash 2 Trade - backed by the D2T token, is in the early-to-mid stages of building and launching its cutting-edge analytics terminal. This will offer investors from all over the world a one-stop-shop for crypto data, the best crypto tools, features, and investment insights. For example, Dash 2 Trade users will have access to social and on-chain metrics.
The latter flags a signal when a whale token movement is tracked. Social metrics, on the other hand, scan Reddit and other popular platforms around the clock in the hunt for trending coins. Dash 2 Trade also provides alerts on new exchange listing announcements, which often result in an immediate bullish trend for the respective project.
Perhaps best of all, Dash 2 Trade users can also access trading signals that suggest trades made on the aforementioned metrics. This is in addition to the project's team of in-house traders that are tasked with analyzing the crypto markets via technical and fundamental analysis. Dash 2 Trade signals inform users of which orders to place - such as a buy/sell, limit, stop-loss, and take-profit.
Dash 2 Trade will also interest those that wish to trade in an automated manner. Its strategy-building ecosystem - which operates on a what-if basis, promotes automated trading in a risk-averse way. This is because the automated strategy can be tested via a backtesting facility that mirrors live crypto market conditions.
Now on to the Dash 2 Trade presale. In a nutshell, the presale is looking to raise $40 million across nine incremental stages. Each stage increases the price for presale investors, so getting in early is always beneficial. As of writing, the presale is in phase two. This prices D2T tokens at $0.05.
The presale supports ETH and USDT, in addition to credit card payments via a third party. Ultimately, not only is Dash 2 Trade a great alternative to digital asset index funds, but it could be the next cryptocurrency to explode.
What is IMPT?
In addition to Dash 2 Trade, IMPT is another newly launched crypto project that is currently offering its native digital asset via a presale campaign. IMPT is looking to revolutionize the carbon credit industry by offering an inclusive trading and offsetting platform that is built on blockchain technology.
The carbon credit space is growing at a rapid pace, considering that governments from around the world are increasingly focusing on green initiatives. One such way that this is being achieved is by limiting the amount of carbon emissions that companies can emit each year. As a result, companies are often forced to buy carbon credits from the OTC markets at an unfavorable cost.
In contrast, IMPT simply requires stakeholders to buy its native digital asset, which is then converted to carbon credits via NFTs. This will appeal to companies that need to obtain additional carbon emissions for the respective year. Another thing to note is that carbon credit prices fluctuate based on demand and supply, much like any other commodity.
As such, investors can buy IMPT tokens in the hope that carbon credit prices rise. If this is the case, the investor can sell their tokens to other IMPT users on the secondary market. Such a seamless process is not possible for retail clients in the traditional carbon credit market, which is why IMPT is likely to appeal to a broad range of stakeholders.
IMPT has already raised over $12 million in presale funding. IMPT tokens can still be purchased at presale prices of just $0.023. This means that early investors will have the opportunity to buy IMPT tokens at a discount, before they are listed on exchanges.
What is Calvaria?
The final presale project to consider as an alternative to crypto index funds is Calvaria. This play-to-earn gaming arena will enable players to earn crypto rewards for engaging with the Calvaria ecosystem. The main concept of the game is based on a battle card strategy. This means that each battle card will have its own traits - some rarer than others.
Players will defeat other users by holding battle cards with greater strength. However, unlike conventional battle card games, Calvaria utilizes blockchain and NFTs. This means that each battle card is owned 100% by the player. Moreover, players can trade their battle card NFTs on the Calvaria marketplace.
As per its play-to-earn model, this means that players can sell their NFTs for other digital assets, and subsequently cash out for fiat money. Not only that, but as players progress through the Calvaria universe, they can earn RAI tokens. This is the native cryptocurrency that fuels the Calvaria game - so once again, users are incentivized to play.
The Calvaria presale continues to break records, with the campaign already in stage four. As each stage passes, the price of RAI increases. As of writing, 1 USDT amounts to 40 RAI. In stage five, however, 1 USDT will amount to 33.33 RAI. As a result, early investors have the opportunity to lock in an immediate upside.
2. Bitwise 10 Crypto Index Fund - Weight Index Fund of the Top 10 Cryptos by Market Cap
In terms of specific crypto index funds, Bitwise is one of the most notable benchmarks in this space. As the name suggests, the Bitwise 10 Crypto Index Fund tracks the 10 largest cryptocurrencies by market capitalization. This means that the more valuable a cryptocurrency is in terms of its market capitalization, the more it contributes to the index.
As of writing, Bitcoin and Ethereum contribute 61.5% and 29.3% to the index fund. As a result, these two cryptocurrencies alone contribute over 91% of the overall allocation. This is once again why crypto index funds are somewhat unattractive, not least because the vast majority of the investment will often be allocated to just two digital currencies.
Nonetheless, while there is no performance fee, the Bitwise 10 Crypto Index Fund charges an expense ratio of 2.5%. This is very costly and in reality, it would be cheaper to buy the respective cryptocurrencies directly from an exchange. This index fund for cryptocurrency has nearly $400 million in assets under management and it carries the ticker symbol BITW.
In terms of performance, the Bitwise 10 Crypto Index Fund has generated returns of 93.35 since its inception in December 2020. On a 12-mont basis, however, the fund is down 70%. Finally, this crypto index fund is rebalanced on a monthly basis. This ensures that the fund is aligned with the broader market.
3. eToro Smart Portfolios - Choose From 14 Professionally-Managed Crypto Smart Portfolios
Those in the market for the best crypto index funds might wish to explore eToro and its Smart Portfolios. eToro is an SEC-regulated online broker that primarily supports crypto and stock trading, in addition to forex and commodities. However, eToro is also popular for its Smart Portfolios - which are professionally-managed baskets of assets.
In this regard, eToro offers 14 different Smart Portfolios that specialize exclusively in cryptocurrencies. Best of all, each Smart Portfolio has its own strategies and objectives, especially when it comes to weighting. For example, the Balanced-Crypto Smart Portfolio consists of 23 different cryptocurrencies - each of which is weighted equally at 4.33%.
This includes everything from Bitcoin, Dash, and Litecoin to ZCash, Maker, and EOS. Perhaps even more interesting is the DAO Smart Portfolio. This tracks 11 of the best altcoins that operate a DAO framework, including Uniswap, AAVE, SushiSwap, and Curve. Another option is to consider the MetaverseLife Smart Portfolio.
Not only does this option track the best metaverse coins like Decentraland, Enjin, and the Sandbox, but also relevant stocks - such as Roblox and Meta Platforms. All in all - there is a crypto Smart Portfolio to suit most objectives. Not only that, but the Smart Portfolio minimum investment at eToro is just $500.
There are no additional fees to invest in Smart Portfolios. On the contrary, the investor will pay the underlying buy and sell commission as and when the SmartPortfolio is set up and rebalanced. eToro users have access to fee-free USD deposits via e-wallets and debit/credit cards. Smart Portfolios can be accessed online or via the eToro mobile app.
Compare eToro Smart Portfolios Now
Your capital is at risk. Crypto asset investments are highly volatile and speculative.
4. Galaxy Crypto Index Fund - Invest in 12 Different Cryptocurrencies With Monthly Rebalancing
Next up on our list is the Galaxy Crypto Index Fund. The purpose of this fund is to track the Bloomberg Galaxy Crypto Index like-for-like. This crypto index fund contains 12 digital currencies and weighting is focused on market capitalization. As a result, the portfolio is heavily weighted to Bitcoin and Ethereum.
With that said, unlike the previously discussed Bitwise crypto index fund, Galaxy caps the weighting to a maximum of 35% per coin. This means that both Bitcoin and Ethereum are collectively weighted at 70%.
The remainder of the portfolio consists of Cardano, Solana, Avalanche, Polkadot, Polygon, Cosmos, Litecoin, Chainlink, Uniswap, and Algorand. The Galaxy Crypto Index Fund was incepted in August 2017 under the ticker symbol BGCI - which makes it one of the most established options in this market.
5. Nasdaq Crypto Index Fund - Diversified Basket of Market Cap Weighted Cryptocurrencies
Incepted in 2020, the Nasdaq Crypto Index Fund is a popular option for those seeking diversification through a single, managed investment. Nasdaq focuses on leading cryptocurrencies across 11 projects. Each digital currency being tracked must trade on at least two vetted exchanges.
Rebalanced every three months, this crypto index fund is once again weighted by market capitalization. As of writing, Bitcoin and Ethereum are weighted at over 69% and 27% respectively, which represents nearly 97% of the overall portfolio.
As a result, just 3% is left over for the remaining 9 cryptocurrencies. This is inclusive of Litecoin, Chainlink, Polkadot, Bitcoin Cash, Stellar Lumens, Uniswap, Axie Infinity, the Sandbox, and Filecoin.
6. Fidelity Crypto Industry and Digital Payments Index - Diversified Portfolio of Crypto-Centric Stocks
This Fidelity cryptocurrency index fund will appeal to investors that feel more comfortable with stocks as opposed to directly investing in digital currencies. In a nutshell, the fund specializes exclusively in stocks that operate in the blockchain technology and cryptocurrency industry.
The largest holdings in this portfolio, at 17.2% and 10.7% respectively, are Block and Coinbase. Other constituents include Riot Blockchain, Cleanspark, Bakkt Holdings, Hut 8 Mining, Bit Digital and Bitfarms.
Some of the stocks within this crypto index fund have taken an unprecedented beating over the prior year. For example, Bakkt and Bit Digital are down nearly 95% and 92% respectively. The Fidelity Crypto Industry and Digital Payments Index comes with a cost-effective expense ratio of just 0.39%.
7. Bitwise DeFi Crypto Index Fund - Invest in the Future of Decentralized Finance
Bitwise once again makes this list of the best crypto index funds. This time, we will discuss the Bitwise DeFi Crypto Index Fund - which offers exposure to the growth of decentralized finance. The fund contains 10 notable DeFi projects at various weights.
However, the fund is heavily weighted to Uniswap at just over 55%. Uniswap and Maker contribute 11.9% and 7.9% respectively. The remainder of this crypto index fund is represented by Curve, Lido DAO, Convex Finance, Compound, Loopring, Yearn.finance, and 0x.
As per the other Bitwise crypto index fund that we discussed earlier, the expense ratio stands at an expense of 2.50%. Furthermore, the minimum investment requirement to access this crypto index fund is $25,000. Since its inception in February 2021, Bitwise DeFi Crypto Index Fund has declined in value by 81%.
What are Crypto Index Funds?
Crypto index funds are created to offer exposure to the digital asset marketplace but in a diversified manner. The main concept is that instead of investing in multiple cryptocurrencies directly through an exchange, index funds offer access to a basket of digital assets through a single trade.
The overarching benefit of this is that the best crypto index funds enable investors to gain exposure to the broader digital asset market. There are more than a dozen crypto index funds in this space - eight of which we have discussed on this page. Each crypto index fund will have its own strategy and goals.
For example, some index funds target the top 10 cryptocurrencies by market capitalization. While others might focus on a specific niche area of the crypto space - such as DeFi. The key metric to look for when choosing the best cryptocurrency index fund is the weighting system utilized. This refers to the percentage that each individual cryptocurrency contributed to the index.
The key issue in this regard is that most crypto index funds give preference based on market capitalization. This means that oftentimes, the vast majority of the portfolio will be weighted towards Bitcoin and Ethereum. In fact, several of the funds discussed today weight more than 90% of the entire portfolio just to these two cryptocurrencies.
As a result, this doesn't really offer investors much in the way of diversification. On the contrary, the investor is essentially allocating the vast majority of their funds to Bitcoin and Ethereum, with the balance split loosely across other cryptocurrencies. Moreover, expense rations are often expensive, with the likes of Bitwise charging 2.5% annually.
Why Invest in Crypto Index Funds?
Still unsure whether crypto index funds are suitable for your trading style? Or are you perhaps considering the best crypto ETFs to buy in 2023?
In this section, we'll discuss some of the main considerations to make before proceeding.
Diversification
Perhaps the main reason why some investors turn to crypto index funds is that it offers instant diversification.
As we have noted throughout this guide, index funds will track a basket of different digital assets, This means that via a single investment, exposure to each and every cryptocurrency can be achieved.
The key issue is that many crypto index funds are heavily weighted to Bitcoin and Ethereum. This means that the portfolio won't be anywhere near as diversified as it could be.
Passive
Another benefit of investing in a crypto index fund is that the process is entirely passive. After the initial investment is made, the provider will automatically rebalance and reweight the crypto index fund based on its own systems and objectives.
For example, some crypto index funds will rebalance the portfolio every month. This will usually readjust the percentage contributions that each individual cryptocurrency is given.
- If a cryptocurrency has a large market capitalization when compared to the previous month, then it will be given a higher percentage.
- And equally, if the cryptocurrency has declined in value, it will likely be given a smaller percentage.
There is also every chance that the rebalancing process will result in a new crypto asset being added to the index fund.
For instance, let's suppose that Solana is the 10th holding in the fund, which is based on market capitalization. If in the following month Solana has been replaced by Polygon at the 10th spot, then the crypto index fund will likely make the swap.
Traditional Investment Process
Investors that are used to traditional financial instruments such as stocks and ETFs will often prefer a crypto index fund over investing directly.
This is because many investors are hesitant about using crypto exchanges - owing to the many scandals concerning hacks.
Then there is the issue of safeguarding the purchased cryptocurrencies in a private wallet which, again, can be intimidating for investors without experience in this space.
Instead, by opting for a crypto index fund, investors can allocate funds via traditional channels. This means investing in the fund through a reputable ETF provider, via an SEC-regulated brokerage.
Crypto Presales vs Crypto Index Funds - Which is Best?
Crypto index funds can represent a viable investment product when the broader markets are bullish. After all, the crypto industry typically moves in tandem - especially in the case of large-cap coins. In other words, when Bitcoin does well, so do other top-10 cryptocurrencies.
However, the fact of the matter is that for nearly 12 months, the cryptocurrency arena has been embroiled in a bear market. And as such, most cryptocurrencies have lost at least 70% from previous highs - sometimes more.
As a result, crypto index funds are losing significant sums of money for their investors. In comparison, throughout the current bear market, many crypto presales have gone on to generate unprecedented returns. Just two examples from 2022 include Lucky Block and Tamadoge - which after their respective presales generated growth of 60x, and 20x respectively.
The best upcoming ICOs as of writing are Dash 2 Trade and IMPT. The former is offering its D2T tokens at just $0.05 and the presale has already raised over $4 million. The D2T token will fuel the Dash 2 Trade analytics dashboard - which is set to launch in 2023.
IMPT is also worth considering for those on the hunt for sizable presale gains. This project is building a carbon credit trading framework that will support retail investors, businesses, and government organizations. IMPT has already raised over $12 million in presale funding.
Conclusion
On the one hand, crypto index funds offer a seamless way to gain exposure to a diversified basket of digital assets via a single trader. Moreover, the best crypto index funds rebalance and reweight the portfolio on behalf of investors.
However, crypto index funds are generating sizable losses at present - as per the broader bear market. As such, crypto presales like Dash 2 Trade offer a great alternative. Early investors will have access to the best price possible - which is why the Dash 2 Trade presale is selling out fast.
FAQs
Are there crypto index funds?
Yes, there are now more than a dozen crypto index funds in the market. Some of the most popular include the Bitwise 10 Crypto Index Fund, Galaxy Crypto Index Fund, and the Bitwise DeFi Crypto Index Fund. Each of the aforementioned index funds exclusively tracks cryptocurrency prices. The Fidelity Crypto Industry and Digital Payments Index, on the other hand, tracks a basket of crypto-centric stocks.
What is the best crypto index fund?
One of the best crypto index funds in terms of popularity is the Bitwise DeFi Crypto Index Fund. This fund invests in a basket of projects that are involved in the growth of decentralized finance - such as Uniswap, Maker, and SushiSwap.
Does Fidelity have a crypto index fund?
Yes, Fidelity currently offers two crypto index funds that may appeal to investors that seek exposure to this emerging industry. First, there is the Fidelity Crypto Industry and Digital Payments Index - which tracks crypto-centric stocks like Coinbase and Block. Then there is the Fidelity Metaverse ETF. This fund tracks stocks that are loosely involved in the metaverse - such as Tencent, Electronic Arts, Netease, and Nintendo.
Is there a Vanguard crypto index fund?
Unlike major competitor Fidelity, Vanguard does not currently offer an index fund for crypto. Whether or not there will be a Vanguard Cryptocurrency index fund in time for the next bull run remains to be seen.
