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

Explore why BTC and ETH remain the backbone of major crypto indices in 2025, how market dynamics shape their dominance, and what this means for investors.

• Bitcoin (BTC) and Ethereum (ETH) continue to be the primary weight‑drivers of global crypto indexes despite a growing diversity of tokens.
• Index construction rules, liquidity thresholds, and institutional adoption keep BTC and ETH at the core of market cap rankings.
• Their resilience offers a stable benchmark for investors seeking exposure to broader token ecosystems.

Over the past year the crypto landscape has expanded dramatically: new DeFi protocols, NFT marketplaces, and real‑world asset (RWA) tokenization platforms have entered the scene. Yet when analysts look at the most widely followed indices—such as the Bloomberg Galaxy Crypto Index or the Bitwise 10 Large Cap—Bitcoin and Ethereum remain the two dominant pillars. For intermediate retail investors this raises a practical question: why are these two coins still the anchors of virtually every crypto index, even as newer projects gain traction?

This article unpacks the mechanics of index construction, the market forces that favor BTC and ETH, and how emerging tokenization models—particularly those that blend blockchain with tangible assets—fit into this landscape. We also take a closer look at Eden RWA, a platform that tokenizes luxury real estate in the French Caribbean, to illustrate how RWAs can coexist within an index‑driven market.

By the end you’ll understand:

• The criteria used by index providers to select and weight tokens.
• How liquidity, market cap, and regulatory certainty reinforce BTC and ETH’s positions.
• The potential for RWAs and tokenized real estate to influence future index composition.

Background and Context of Crypto Indices in 2025

Indices are the reference points that guide institutional money managers, ETFs, and retail investors alike. In 2025, the most influential crypto indexes still rely on a handful of top‑tier assets because they provide:

• Liquidity: The ability to trade large volumes without significant slippage.
• Transparency: Clear market data and regulatory oversight that reduce information asymmetry.
• Stability of weightings: A predictable methodology for rebalancing that avoids frequent drastic changes.

Index providers such as Bloomberg, FTSE Russell, and Bitwise use a combination of market‑cap thresholds, trading volume filters, and minimum liquidity requirements. For example, the Bloomberg Galaxy Crypto Index includes all tokens with a daily traded volume above $10 million on at least two major exchanges and a market cap that ranks them within the top 100 globally.

Bitcoin’s dominance—currently around 45–50% of the total crypto market cap—means it automatically satisfies these criteria. Ethereum, while slightly lower in market cap (around 15–20%), still benefits from high liquidity and widespread exchange listings. Their combined weight typically exceeds 60%, giving them outsized influence on index performance.

Newer tokens often fall short of the volume or regulatory thresholds required for inclusion. Even if they achieve a large market cap, their trading may be concentrated in a few exchanges or subject to higher volatility, which reduces their attractiveness as core index constituents.

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

The phrase “anchor” refers to the fact that BTC and ETH determine the baseline performance of an index. If these coins rise or fall, most of the index’s value follows suit. There are several intertwined reasons for this:

• Market‑cap dominance: Bitcoin remains the largest crypto asset by market cap, while Ethereum is the second largest. Their relative size ensures they occupy a central position in any top‑tier list.
• Liquidity and exchange presence: Both assets are listed on every major spot and derivatives exchange worldwide, providing ample depth for large orders.
• Institutional adoption: Hedge funds, family offices, and sovereign wealth funds increasingly allocate a portion of their crypto portfolios to BTC and ETH. This institutional demand drives both price stability and trading volume.
• Regulatory clarity: Compared to newer tokens, Bitcoin and Ethereum enjoy more established legal frameworks in jurisdictions such as the United States (SEC filings), Europe (MiCA guidance), and Asia (various regulatory sandboxes). Lower legal risk makes them safer for index construction.
• Technological maturity: Bitcoin’s proof‑of‑work consensus and Ethereum’s transition to proof‑of‑stake (Ethereum 2.0) have been battle‑tested over years, giving investors confidence in their security and reliability.

Because of these factors, index providers apply a “weight‑by‑market‑cap” rule that inherently gives BTC and ETH the highest influence. Even when other tokens join an index, they occupy smaller weightings—often under 5% each—so the overall direction remains dominated by Bitcoin and Ethereum.

How It Works: The Mechanics of Index Construction

Index construction can be broken down into three core stages:

1. Selection criteria: Define eligibility thresholds for market cap, liquidity, exchange presence, and regulatory status. Tokens meeting these thresholds are shortlisted.
2. Weight calculation: Assign a weight to each eligible token based on its relative market cap or other proprietary factors (e.g., volatility). The sum of all weights equals 100%.
3. Rebalancing schedule: Rebalance the index periodically (quarterly, semi‑annually) to reflect changes in market conditions and maintain compliance with the methodology.

Because Bitcoin’s and Ethereum’s market caps are so large, their weights naturally dominate. Even if a new token surpasses a threshold for inclusion, its weight is proportionally small relative to BTC or ETH. The index provider may also impose a cap on maximum individual weighting (e.g., no single asset can exceed 20%) to avoid concentration risk.

In addition to market‑cap weighting, some indexes use price‑weighted approaches that base weights on the token’s price rather than its capitalization. However, this method is less common in crypto because it amplifies volatility and can lead to extreme weight shifts after a single large price movement.

Market Impact & Use Cases: Beyond Bitcoin and Ethereum

Despite BTC and ETH’s dominance, the broader ecosystem offers numerous use cases that contribute indirectly to index performance:

• Decentralized Finance (DeFi): Protocols like Uniswap, Aave, and Compound generate liquidity pools whose fees feed into token valuations. These tokens often sit in the top 50 of market cap, offering exposure for investors seeking yield.
• NFT marketplaces: Platforms such as OpenSea and Rarible have driven secondary markets for digital art and collectibles, creating a new asset class within crypto indices that track trading volume.
• Real‑World Asset tokenization (RWA): Projects tokenizing bonds, real estate, or commodities provide tangible collateral backing. While currently a smaller slice of the market, RWAs can attract institutional capital due to their regulated nature.

In 2025, index providers have begun to consider asset‑backed tokens in their methodologies. For instance, some indices now include an “RWA” sub‑index that tracks tokenized real estate or debt instruments. These additions broaden the risk–return profile of a crypto portfolio but remain secondary to BTC and ETH’s foundational role.

Risks, Regulation & Challenges

While BTC and ETH’s dominance offers stability, it also introduces specific risks:

• Regulatory crackdowns: Heightened scrutiny from regulators such as the U.S. Securities and Exchange Commission (SEC) or European MiCA could affect trading volumes or impose reporting requirements.
• Smart contract vulnerabilities: Though Bitcoin’s codebase is relatively simple, Ethereum’s extensive smart‑contract ecosystem exposes it to bugs and exploits that can erode confidence.
• Liquidity concentration: A sudden market shock (e.g., a hack or a major exchange outage) could trigger rapid sell‑offs due to high concentration of holdings among large holders (“whales”).
• Custody risk: Holding BTC and ETH in non‑custodial wallets mitigates counterparty risk, but increases the potential for loss if private keys are compromised.

For RWAs, additional challenges arise:

• Legal ownership clarity: Ensuring that token holders have enforceable rights to underlying assets requires robust legal structures (e.g., SPVs). Ambiguities can lead to disputes.
• Custody of physical assets: Real‑estate property must be physically managed, maintained, and insured—processes that are not inherently blockchain‑based.
• Liquidity constraints: Tokenized real‑estate typically trades on specialized platforms with lower daily volumes compared to BTC or ETH.
• KYC/AML compliance: RWA platforms must verify investor identities, which can deter retail participation if onboarding is too onerous.

Outlook & Scenarios for 2025+

The trajectory of BTC and ETH within crypto indices will likely follow one of three scenarios:

• Bullish scenario: Institutional adoption continues to surge, regulatory clarity improves, and Bitcoin’s price climbs toward $150,000. Ethereum’s DeFi ecosystem matures, solidifying its position as the second anchor.
• Bearish scenario: A major hack or regulatory clampdown triggers a sustained sell‑off, reducing liquidity for both assets. Index providers may adjust weighting thresholds, allowing newer tokens to gain greater influence.
• Base case (most realistic): Bitcoin and Ethereum remain the core anchors but experience moderate volatility. Newer RWAs and utility tokens slowly infiltrate indices as they meet liquidity and regulatory standards, diversifying exposure without displacing BTC or ETH.

Retail investors should monitor:

• Regulatory announcements from SEC, MiCA, and other bodies.
• Liquidity metrics on major exchanges (average daily volume).
• On‑chain activity such as active addresses and transaction counts.
• The inclusion or exclusion of tokens in leading indices.

Eden RWA: A Concrete Example of Tokenized Real Estate

Eden RWA is a pioneering investment platform that brings French Caribbean luxury real estate into the Web3 ecosystem. The platform offers:

• Tokenization model: Each villa in Saint‑Barthélemy, Saint‑Martin, Guadeloupe, or Martinique is owned by a special purpose vehicle (SPV) structured as an SCI/SAS. Investors purchase ERC‑20 tokens that represent fractional ownership of the SPV.
• Yield distribution: Rental income from the properties is paid out in USDC—a stablecoin pegged to the U.S. dollar—directly into investors’ Ethereum wallets via automated smart contracts.
• Experiential layer: Quarterly, a bailiff‑certified draw selects one token holder for a free week’s stay at the villa they partially own, adding utility beyond passive income.
• Governance: Token holders can vote on key decisions (renovations, sale timing) through a DAO‑light structure that balances community input with efficient execution.
Technology stack: Built entirely on Ethereum mainnet, the platform uses auditable smart contracts and supports wallet integrations such as MetaMask, WalletConnect, and Ledger. An in‑house peer‑to‑peer marketplace facilitates primary and secondary token exchanges once a compliant secondary market is launched.

How Eden RWA fits into the index conversation:

• Diversification potential: As RWAs mature, they may qualify for inclusion in crypto indices that seek asset‑backed tokens, providing a stable, yield‑generating component alongside BTC and ETH.
• Regulatory alignment: By structuring the SPVs under local real‑estate law and distributing income via regulated stablecoins, Eden RWA addresses key regulatory concerns that often hinder tokenized assets.
• Liquidity development: The planned secondary market will improve liquidity, a prerequisite for index inclusion, while still allowing investors to benefit from rental income.

If you are curious about how tokenized real estate can complement a crypto portfolio, you might consider exploring Eden RWA’s presale