Funds that track a basket of cryptocurrencies are likely to see a significant surge in popularity in the coming year as investors seek accessible exposure to a wider array of digital assets, according to Matt Hougan, investment chief at Bitwise.
"Crypto index funds are going to be a big deal in 2026," Hougan stated in a recent note. "The market is getting more complex and the use cases are multiplying." He elaborated that while the overall crypto market is expected to expand, predicting the performance of individual tokens remains challenging. Therefore, owning a fund that mirrors the market's performance is presented as a "great place to start," though it is acknowledged that such an approach is "not right for everyone."
Many exchange-traded fund (ETF) issuers, including Bitwise, offer funds that track multiple cryptocurrencies. These funds draw inspiration from established indexes like the S&P 500, which tracks the top 500 companies on U.S. stock exchanges.
Multi-crypto ETFs are already available, with some launching in the U.S. earlier this year. These funds hold cryptocurrencies in proportion to their market capitalization. However, they have experienced relatively modest inflows, largely because they predominantly hold Bitcoin (BTC), which currently accounts for nearly 60% of the market, according to CoinGecko.
The "Buy the Market" Strategy in an Unknowable Crypto Landscape
Hougan emphasized that even with his extensive experience and a network of crypto experts, he cannot confidently predict which blockchain will emerge victorious or how specific market developments will unfold.
"At this stage of crypto’s development, I’d argue it’s unknowable," he explained. "Outcomes will be shaped by regulation, execution, macro conditions, the actions of a few key individuals, luck, and a hundred other variables." He further commented, "Forecasting all of that correctly would require supernatural foresight."
The crypto markets saw a rally from November 2024 through January, coinciding with Donald Trump’s presidential election and inauguration, and have remained elevated due to his pro-crypto policies.
However, the crypto sector has also been affected by negative impacts from broad U.S. tariffs and uncertainty surrounding further interest rate cuts, as traditional finance becomes increasingly integrated into the market.
"Given that uncertainty, my approach is simple: I buy the market," Hougan stated. "Specifically, I buy a market-cap-weighted crypto index fund." He projected that crypto "will be far more important in 10 years than it is today," with the market potentially growing up to 20 times over that period.
Hougan also referenced comments made by Securities and Exchange Commission chair Paul Atkins on Wednesday, who suggested that the U.S. financial system could adopt tokenization within the next "couple of years."
The US equity market is a ~$68 trillion market. We currently have ~$670 million in tokenized stocks. https://t.co/IgyJ20oiar
"Stablecoins will matter more. Tokenization will matter more. Bitcoin will matter more. And I think a dozen other major use cases will follow: prediction markets, decentralized finance (DeFi), privacy tech, digital identity," Hougan predicted.
He further elaborated on the risks of attempting to pick individual winners: "I don’t want to risk picking the wrong chain. Imagine correctly calling a market that goes up 100,000x—and still underperforming because you backed the wrong horse."
"So I use a crypto index fund as the core of my portfolio," Hougan concluded, "knowing that, however crypto evolves, I’ll own exposure to the potential winners."