BTC and ETH analysis: why both assets still anchor most crypto indices

Explore why Bitcoin and Ethereum remain the core of global crypto indices in 2025, how they shape market dynamics, and what this means for investors.

• Bitcoin (BTC) and Ethereum (ETH) continue to be the backbone of virtually all cryptocurrency indexes.
• Their dominance is rooted in liquidity, network security, and institutional acceptance.
• Understanding their role helps investors gauge exposure, risk, and potential returns across the crypto ecosystem.

In 2025 the digital asset landscape has expanded from a handful of speculative tokens to a diversified portfolio of DeFi protocols, tokenized securities, and real‑world asset (RWA) platforms. Amid this growth, Bitcoin and Ethereum remain the two most liquid and widely held assets in every major crypto index—from the Bloomberg Galaxy Crypto Index to custom indices used by hedge funds.

For intermediate retail investors, the question is not whether BTC or ETH will survive, but how their continued dominance influences portfolio construction, liquidity provision, and risk management. This article breaks down the mechanics behind index weighting, explores market impacts, assesses regulatory headwinds, and looks ahead to 2025‑plus scenarios.

By the end of this piece you’ll understand why BTC and ETH are still anchors, what that means for your exposure, and how emerging RWA platforms like Eden RWA fit into the broader ecosystem.

Background & Context

Crypto indices serve a similar purpose to traditional equity or bond indexes: they provide a benchmark for performance measurement, facilitate passive investment products (ETFs, index funds), and offer liquidity pools that trade against a composite of tokens. The methodology typically assigns weights based on market capitalization, trading volume, or a hybrid approach.

Bitcoin, launched in 2009, pioneered the space with a clear purpose—digital gold. Ethereum followed in 2015 with programmable smart contracts, creating an ecosystem for decentralized applications (dApps). Their early network effects, robust developer communities, and institutional interest have cemented them as the default “base currencies” of the market.

In 2025, regulatory frameworks such as MiCA in Europe and evolving SEC guidelines in the United States have begun to recognize crypto assets more formally. These developments reinforce Bitcoin’s status as a regulated asset class and Ethereum’s role as an essential platform for token issuance.

How Index Weighting Works

The composition of a typical crypto index follows these steps:

• Eligibility screening: Tokens must meet liquidity thresholds, market cap size, and compliance checks.
• Weight calculation: Often based on market capitalization, but some indices use a “float‑adjusted” method to reduce concentration risk.
• Rebalancing schedule: Monthly or quarterly adjustments reflect changes in market dynamics.

Because Bitcoin and Ethereum dominate the market cap—together accounting for over 70% of the top‑10 crypto assets—they receive proportionally high weights. Even when a new token appears, its weight is initially small, preventing rapid shifts in index composition.

Market Impact & Use Cases

Bitcoin and Ethereum’s anchoring role manifests across multiple layers:

• Lending & borrowing platforms: DeFi protocols such as Aave or Compound use BTC and ETH as collateral, generating yield streams for borrowers.
• Stablecoin backing: Many USD‑pegged stablecoins (USDC, USDT) rely on ETH or BTC to secure reserves in liquidity pools.
• Liquidity provision: Automated market makers (AMMs) like Uniswap and SushiSwap feature BTC/ETH pairs with the highest trading volume, ensuring tight spreads for traders.
• Tokenized assets: RWA platforms, including Eden RWA, issue tokenized real estate backed by ETH smart contracts, leveraging Ethereum’s infrastructure for ownership transfers.

The table illustrates how off‑chain assets are converted into on‑chain tokens, a process that benefits from the trustless nature of Ethereum while preserving legal ownership via SPVs.

Risks, Regulation & Challenges

• Regulatory uncertainty: The SEC’s stance on securities classification for certain tokenized assets remains ambiguous. MiCA provides clarity in Europe but does not cover all jurisdictions.
• Smart contract risk: Bugs or vulnerabilities can lead to loss of funds, as seen in the 2021 Poly Network hack.
• Custody & liquidity: While BTC and ETH enjoy deep markets, smaller tokens may suffer from slippage during large trades, affecting index rebalancing.
• Legal ownership gaps: Tokenized assets often rely on off‑chain legal structures (SPVs, trusts) that must be properly registered to ensure enforceability.
• KYC/AML compliance: Exchanges and custodians face increased scrutiny, potentially limiting access for some users.

A negative scenario would involve a coordinated regulatory crackdown on crypto exchanges, leading to liquidity freezes. This could depress BTC and ETH prices, causing index weights to shift dramatically and triggering cascading effects across DeFi protocols.

Outlook & Scenarios for 2025+

• Bullish scenario: Full regulatory clarity under MiCA and SEC guidance leads to institutional inflows. BTC and ETH adopt broader use cases (e.g., as collateral in traditional finance), boosting their index weights.
• Bearish scenario: Geopolitical tensions or a global recession cause risk aversion, leading to a sell‑off of high‑beta crypto assets while stablecoins maintain value. Index rebalancing may reduce BTC and ETH exposure temporarily.
• Base case (12–24 months): Gradual institutional adoption coupled with incremental regulatory updates keeps BTC and ETH as primary anchors but introduces more diversified tokens into indices, slightly diluting their weights.

Retail investors should monitor macroeconomic indicators, regulatory filings, and on‑chain activity metrics such as active addresses and transaction volumes to gauge potential shifts in index composition.

Eden RWA: A Concrete Example of Tokenized Real Estate

Eden RWA is an investment platform that democratizes access to French Caribbean luxury real estate—Saint‑Barthélemy, Saint‑Martin, Guadeloupe, and Martinique—by combining blockchain with tangible, yield‑focused assets. The platform issues ERC‑20 property tokens representing indirect shares of a dedicated special purpose vehicle (SPV) that owns carefully selected villas.

Key features:

• ERC‑20 tokenization: Investors receive digital tokens that can be traded or held in Ethereum wallets.
• Rental income distribution: Periodic payouts are made in USDC, a stablecoin pegged to the U.S. dollar, directly into investors’ wallets via automated smart contracts.
• Quarterly experiential stays: A bailiff‑certified draw selects a token holder for a free week in one of the villas they partially own.
• DAO‑light governance: Token holders vote on key decisions—renovations, sale timing, usage—ensuring aligned interests and transparency.
• Future liquidity: A compliant secondary market is planned to enable token trading beyond the primary offering.

Eden RWA exemplifies how real‑world assets can be integrated into the crypto ecosystem while leveraging Ethereum’s infrastructure. It highlights the growing trend of blending traditional investment models with blockchain efficiency, thereby expanding the scope of what constitutes an “anchor” asset in broader portfolio strategies.

Interested readers may explore Eden RWA’s presale to learn more about how tokenized real estate can complement a diversified crypto exposure. For further details, visit Eden RWA Presale or the dedicated presale portal.

Practical Takeaways

• BTC and ETH typically comprise 70–80% of the top crypto index weights; monitor their market caps for shifts.
• Track liquidity metrics (average daily volume, order book depth) to gauge how quickly positions can be entered or exited.
• Review regulatory developments—especially MiCA updates in Europe and SEC rulings in the U.S.—as they influence asset classification.
• When investing in tokenized RWAs, verify the legal structure of the SPV and ensure the platform has audited smart contracts.
• Consider the impact of yield-generating DeFi protocols that use BTC/ETH as collateral; these can amplify exposure indirectly.
• Use on‑chain analytics (e.g., Glassnode, Nansen) to monitor active addresses and transaction trends for early signals of market sentiment.
• Always assess the liquidity profile of any token—especially those with lower trading volumes—to avoid slippage during rebalancing events.
• Diversify across multiple asset classes (stablecoins, RWAs, high‑yield DeFi tokens) to mitigate concentration risk in BTC/ETH.

Mini FAQ

What defines a crypto index?

A crypto index aggregates selected digital assets based on criteria like market cap, liquidity, and compliance. It serves as a benchmark for performance measurement and facilitates passive investment products.

Why do BTC and ETH dominate most indices?

Because they command the largest market capitalizations, highest trading volumes, and strongest institutional support, which lead to higher weighting in index construction methodologies.

How does tokenized real estate differ from traditional real estate investment?

Tokenization converts ownership into digital tokens that can be traded on blockchain platforms, offering fractional ownership, instant liquidity (when available), and automated income distribution through smart contracts.

Is investing in BTC or ETH safe?

No investment is risk‑free. While BTC and ETH have proven resilience, they remain subject to market volatility, regulatory changes, and technological risks such as smart contract bugs.

What should I look for when choosing an RWA platform?

Assess the legal structure (SPV/SCI/SAS), audit trails of smart contracts, liquidity provisions, and governance mechanisms that align investor interests with asset management.

Conclusion

The dominance of Bitcoin and Ethereum as anchors in crypto indices is not a fleeting trend but a structural feature rooted in network security, liquidity, and regulatory evolution. Their continued prominence shapes how DeFi protocols function, how stablecoins maintain peg stability, and how emerging RWA platforms like Eden RWA integrate with traditional asset classes.

For intermediate retail investors, this reality underscores the importance of monitoring index composition changes, staying informed about regulatory developments, and understanding how exposure to BTC/ETH can both stabilize and amplify portfolio risk. As 2025 unfolds, the crypto ecosystem will likely broaden its base while maintaining these two assets as foundational pillars.

Disclaimer

This article is for informational purposes only and does not constitute investment, legal, or tax advice. Always do your own research before making financial decisions.