Bitwise Crypto Asset Index Methodology

Guiding Principles and Indexing Approach

The Bitwise Crypto Indexes provide investors with a transparent, rules-based methodology to track the performance of individual crypto assets and market segments. Designed for benchmarking, index-tracking funds, and market analysis, these indexes adapt traditional asset indexing practices to the unique challenges of the cryptocurrency market.

Core Principles:

• Transparency: Decisions follow documented, rules-based processes.
• Investability: Indexes account for liquidity, custody, and trading venue stability.
• Governance: The Bitwise Crypto Index Committee oversees methodologies and adjustments.

Governance Structure

1. Bitwise Crypto Index Committee

Responsibilities:

• Monthly reviews of data sources and methodologies.
• Public documentation of discretionary decisions.
• Verification of index calculations.

Key Members:

• Matt Hougan (Chairman): CIO of Bitwise, ETF Hall of Fame inductee.
• Hunter Horsley: CEO, ex-Facebook product manager.
• Hong Kim: CTO, software security expert.

Voting: Majority vote with a quorum of two members.

2. Bitwise Crypto Index Advisory Board

Role: Advises on traditional/crypto indexing best practices.
Members Include:

• Spencer Bogart (CFA): Blockchain Capital partner.
• Srikant Dash (CFA): Ex-S&P Global Head of Research.

Eligibility Requirements

1. Trading Venues

Criteria:

1. Open platform for crypto/fiat trading.
2. No capital controls or regulatory violations.
3. ≥1% of global 30-day trading volume.
4. Reliable API and minimal downtime.

Review: Annual eligibility checks; emergency removals permitted.

2. Crypto Assets

Criteria:

1. Non-pegged digital bearer instruments (excludes stablecoins).
2. Freely tradable with robust custody (e.g., Coinbase Custody, Fidelity Digital Assets).
3. ≥1% free-float-adjusted market cap traded monthly.
4. Unit price >$0.01 for 30+ days.
5. No memecoins or securities law risks.

Hard Fork Exemption: 45-day grace period for volume requirements.

Pricing & Market Cap Methodology

1. Pricing

• Source: Lukka Prime Intraday prices.
• Network Distributions: Hard forks, airdrops, and staking rewards excluded from index values.

2. Market Capitalization

• Free-Float Adjustment: Excludes developer-held, lost, or illiquid coins.
• Monthly updates: Adjusted at 4 p.m. ET one week pre-rebalance.

Index Maintenance

Reconstitution Rules

• Monthly Rebalancing: Last business day at 4 p.m. ET.
• Buffer Zones: 10% market-cap threshold to reduce turnover.

Available Indexes

1. Bitwise 10 Large Cap (BITX): Top 10 assets by market cap.
2. Decentralized Finance Index: Top 10 DeFi assets (e.g., lending/derivatives protocols).
3. Equal Weight Indexes: Quarterly rebalanced (e.g., BTC/ETH).

Example:
👉 BITX Index Performance

FAQ

Q1: How often are Bitwise indexes updated?

A: Prices update hourly; official levels publish daily at 4 p.m. ET.

Q2: Are hard forks included in index values?

A: No—forked assets require manual claiming and introduce risk.

Q3: What custodians are approved for eligible assets?

A: Anchorage, BitGo, Coinbase Custody, and other regulated entities.

Q4: Why exclude memecoins?

A: They lack fundamental utility per Committee criteria.

👉 Explore Crypto Index Investing

Methodology reflects data as of May 2025. For live updates, visit Bitwise’s official site.