The digital assets market continues to mature with the arrival of new tools aimed at institutional investors. In this context, S&P Dow Jones Indices and Pantera Capital unveil a benchmark index that favors projects generating real economic activity rather than the popularity of cryptocurrencies. This new approach intends to offer an analysis framework closer to the standards of traditional financial markets. It is also distinguished by a striking choice: the exclusion of bitcoin, the functioning of which does not correspond to the criteria retained by the two companies.
In brief
- S&P and Pantera launch crypto index based on protocols’ revenue and economic activity.
- The initial portfolio includes 18 assets, including Ether, Solana, BNB, Tron and Hyperliquid.
- Bitcoin is excluded because it does not meet the criteria for a revenue-generating protocol.
- The index targets institutional investors and could serve as a benchmark for future financial products.
- This methodology breaks with the major crypto indices, largely dominated by bitcoin.
S&P and Pantera bank on digital asset fundamentals
S&P Dow Jones Indices has partnered with Pantera Capital to launch the S&P Pantera Digital Asset Index. This benchmark is based on a methodology that favors digital assets displaying concrete adoption and revenues from their protocol. Unlike many existing products, it does not classify assets according to their price movement, their notoriety or the attention they receive in the market. This approach thus seeks, according to the two companies, to highlight economic fundamentals more than speculative movements around bitcoin or altcoins.
According to theintroduction of the index, the selection is based on clearly defined criteria. Smart contract platforms and decentralized finance protocols feature prominently as they are valued based on revenue generated over the past two quarters. Each asset must also have a minimum market capitalization of $500 million to be included in the index. Finally, it will be rebalanced every quarter and the weighting of the same asset cannot exceed 35%, in order to limit excessive concentrations.
The index was launched with a portfolio consisting of 18 tokens. These include Ether, Binance Coin, Solana, Tron and Hyperliquid. On the other hand, memecoins and projects whose economic activity remains limited are not a priority. This methodology brings this index closer to the practices used in traditional financial markets.
An index designed for institutional investors
This index primarily targets institutional investors wishing to obtain diversified exposure to blockchain networks, digital infrastructures and different protocols. It could also serve as a reference for the creation of future investment products. Asset managers could use it as a benchmark to construct portfolios or evaluate actively managed strategies.
In the press release published by S&P Global, the two partners estimate that “ this initiative reflects a broader evolution in the digital assets market “. Blockchain applications continue to develop, while regulatory frameworks gradually become more precise in several jurisdictions. At the same time, institutional investors now have broader access to the sector, although many current products still offer global exposure without distinguishing projects according to their actual economic activity.
Dan Morehead, founder and managing partner of Pantera Capital, believes that asset allocation remains one of the key challenges facing international investors. According to him, the difficulty does not lie in the lack of opportunities, but in how to select the most relevant projects.
The main sticking point in the cryptocurrency space hasn’t changed: how to allocate assets.
Dan Morehead, founder and managing partner of Pantera. Source : S&P Global press release.
He adds that the two companies developed this index in order to identify assets and infrastructure that present true economic value, prioritizing networks capable of demonstrating sustainable activity.
Why Bitcoin is not part of this index
One of the main particularities of this index lies in the exclusion of bitcoin. Cathy Clay, CEO of S&P Dow Jones Indices, explains that the exclusion of BTC results exclusively from the methodology used to construct this new index:
Bitcoin does not meet the criteria applied because it is not a revenue-generating protocol. The objective is above all to measure the economic activity produced by blockchain networks rather than their valuation on the market.
Cathy Clay, CEO of S&P Dow Jones Indices. Source: S&P Global press release.
This approach is based on a different logic than that adopted by most traditional crypto indices. Rather than classifying assets according to their capitalization or market performance, S&P and Pantera favor protocols capable of generating revenue and demonstrating measurable economic activity.
During a interview granted to CNBC, Cathy Clay explained that this methodology was directly inspired by the standards used in traditional financial markets:
What we try to apply to digital assets are the same principles that we have in our stock indices.
Cathy Clay, CEO of S&P Dow Jones Indices. Source: CNBC.
For the executive, this approach brings more rigor to the valuation of digital assets and helps investors focus on economic fundamentals rather than the noise generated by market fluctuations.
Bitcoin remains the main benchmark for investors
What is certain is that the exclusion of bitcoin does not mean that its role in the digital asset market is diminishing. The queen of cryptocurrencies maintains a dominant place in most institutional indices, which seek above all to reflect the overall capitalization of the market rather than the revenues generated by the protocols. This difference in methodology explains why the choice of S&P and Pantera stands out from the references already used by investors.
For comparison, the Nasdaq CME Crypto Index is composed of approximately 77% bitcoin and almost 13% ether. For its part, the FTSE Digital Asset All Cap Index also devotes nearly 75% of its portfolio in bitcoin. These two indices illustrate the considerable weight of the first cryptocurrency in portfolios intended to represent the digital asset market as a whole.
This dominant position is explained by the place occupied by bitcoin since its launch. It remains the leading crypto by its capitalization estimated at around 57% of the total market according to CoinGecko dataand remains the main entry point for institutional investors into the market. The numerous financial products developed around this asset also demonstrate its benchmark status for a large part of the industry.
The S&P Pantera Digital Asset Index, however, has a different objective. Instead of replicating market structure, it favors protocols that can demonstrate measurable economic activity through the revenue they generate. Investors thus have two complementary approaches: one reflects the weight of assets on the market, while the other emphasizes the economic fundamentals of blockchain networks.
This initiative illustrates the growing desire to apply methods inspired by major financial indices to digital assets. If this approach meets the expectations of institutional investors, it could serve as a basis for new products built around measurable economic criteria. Bitcoin, which remains the main cryptocurrency by its capitalization and the reference for major market indices, however follows a logic different from that retained by S&P and Pantera. As the sector continues to structure itself, investors should have several complementary benchmarks, adapted to distinct allocation and analysis objectives.
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