Crypto Long & Short: The measure of a maturing market

You're reading Crypto Long & Short, our weekly newsletter featuring insights, news and analysis for the professional investor. Sign up here to get it in your inbox every Wednesday.

Welcome to our institutional newsletter, Crypto Long & Short. This week:

It is worth shining a light on an important tool in the evolution of digital asset markets: the index. At their core, indexes are a way of measuring markets. They turn fragmented, around-the-clock trading data of different types of securities — from equities to bonds to digital assets — into clear, comparable figures investors can actually use. The ability to capture the size and performance of different cryptocurrencies and tokens is becoming central to how digital assets are understood by institutional investors like asset managers, pension plans, foundations and endowments.

As digital assets move toward broader institutional adoption, investors bring familiar expectations with them. They want the same tools that support decisions across public markets, including transparent pricing, standardized benchmarks, independent governance and reliable ways to measure performance and risk. In other words: they want what indexes provide.

Throughout financial history, the arrival of trusted benchmarks has often marked the moment that a new market becomes an investable one. Equities, fixed income, commodities and currencies each developed their own benchmarks as they matured. None of these measures are the market itself, but they are the lens through which it can be seen clearly and compared consistently.

Digital assets are following that path. A decade ago, crypto pricing was scattered across venues with very different standards, leaving investors to guess at fair value. Today, rules-based methodologies of indexes aggregate data across exchanges, screen for quality and flag anomalies — producing reference points reliable enough to anchor derivatives pricing and support the spot bitcoin ETFs now drawing institutional capital. That trust came not because prices rose, but because measurement improved.

It is worth being precise about what an index is and is not. An index holds no assets and no money. It is a licensed statistical construct, a rules-based measurement that others can tie to research or to investment vehicles such as exchange-traded funds. An asset manager builds the product and holds the capital; the index provides the yardstick. That separation keeps the measurement independent of the money it measures.

The role of benchmark indexes is to describe and measure markets. Providing transparent rules, documented governance, independent oversight and clear procedures under stress requires rigor and discipline. Index providers adopt these disciplines voluntarily, drawing on standards refined over decades in other asset classes.

A new report from the Index Industry Association examines how digital asset indexes are evolving to meet these expectations — and must keep evolving as stablecoins and tokenized assets enter the picture. Transparency is rarely the loudest part of a market, but it tends to be the part that lasts.

The conversation about crypto in client portfolios has shifted in the past six months, and advisors who still think in terms of the old framework risk being caught flat-footed. In a new interview with The Wealth Advisor, Dave LaValle, president of CoinDesk Data & Indices, laid out why.

The clearest signal came from Wall Street. “The Morgan Stanley team launched their bitcoin ETF in early April, and a little bit more than a month in, and they're over $230 million in assets,” LaValle said. “To amass $230 million in basically a month, it's kind of insane.”

He framed crypto as a disruptive technology that needs two things to take hold: the tech itself, which exists, and regulatory clarity. The GENIUS Act has set a framework for stablecoins backed by U.S. Treasuries, and the CLARITY Act, addressing market structure, could reach a vote “sometime in the next month or two.”