What is a crypto index fund?

A crypto index fund is a fund that owns a basket of cryptocurrencies chosen by a set of rules, rather than a single coin. The idea comes from stock index funds: instead of picking assets one by one, the fund follows an index and holds what the index says to hold. Buying a share gives exposure to the whole basket through one product.

How does a crypto index work?

An index provider publishes rules for which coins qualify and how much weight each one gets. A common approach is to rank coins by market cap, keep the largest ones that pass screens, and weight them by size. The fund then rebalances on a schedule, buying and selling so its holdings match the updated index.

The Bitwise 10 Large Cap Crypto Index is one example. It selects the 10 largest eligible crypto assets by free-float market value, screens them for liquidity, custody, security and regulatory status, and rebalances monthly. In December 2025, bitcoin made up about 74% of the Bitwise fund that tracks it, and ether about 16%, so the two largest coins dominated the basket.

What is the Bitwise index fund?

The Bitwise 10 Crypto Index Fund (ticker BITW) launched in 2017, and Bitwise describes it as the first crypto index fund. In December 2025 it began trading on NYSE Arca as an exchange-traded product. Under that structure, 90% of the holdings go to coins that already have their own single-coin products, and all other coins are capped at 10% combined.

Bitwise also notes that the fund is not registered under the Investment Company Act of 1940, so it does not carry the protections of a traditional mutual fund. Its coin holdings are reduced over time to pay the management fee.

What is a crypto index ETF?

A crypto index ETF, or exchange-traded product, holds the basket and trades on a stock exchange like a share. On September 17, 2025, the SEC approved generic listing standards that let exchanges list qualifying products holding spot commodities, including crypto, without a separate rule filing for each one. The same day, it approved the Grayscale Digital Large Cap Fund, which follows the CoinDesk 5 Index. Earlier, in July 2025, the SEC allowed crypto products to create and redeem shares in coins rather than only cash. For single-asset versions, see what a Bitcoin ETF is and Ethereum, Solana and XRP ETFs.

How closely does an index fund follow its index?

Not perfectly. Regulators measure the gap between a fund's returns and its benchmark as tracking error. That gap can change with market conditions, portfolio adjustments and changes to the index itself, and a fund's fees are paid out of its holdings, which also pulls its returns slightly below the index over time. Index funds still carry the swings of the coins they hold, which are covered in why crypto is so volatile. Fund structures and rules can change, so these details reflect the market as of October 2026.