Funds that track a basket of cryptocurrencies are expected to gain popularity next year, offering investors a simple way to access a broader range of digital assets, according to Bitwise’s Chief Investment Officer Matt Hougan.
“Crypto index funds are going to be a big deal in 2026,” Hougan said Monday. “The market is becoming more complex, and the number of use cases is multiplying.”
He noted that while the crypto market is poised for growth, it’s impossible to predict which tokens will outperform. For many investors, holding a fund that tracks the overall market is “a great place to start,” though it “may not be right for everyone.”
Many ETF issuers, including Bitwise, already offer multi-crypto funds modeled on traditional indexes like the S&P 500, which track the largest 500 U.S. companies. Some U.S. crypto ETFs launched earlier this year hold assets in proportion to each token’s market capitalization, though inflows have been modest given Bitcoin’s dominance—nearly 60% of the market, according to CoinGecko.
“Buy the market” amid crypto’s unpredictability
Hougan acknowledged that despite his experience and network within crypto, he cannot say “with confidence which chain will win, or precisely how things will turn out.”
“At this stage, crypto’s future is unknowable,” he said. “Outcomes will be shaped by regulation, execution, macro conditions, key individuals, luck, and countless other variables. Forecasting all of that correctly would require supernatural foresight.”
The crypto market rallied from November 2024 to January, boosted by Donald Trump’s presidential election and inauguration and his pro-crypto stance. However, uncertainty around U.S. tariffs and potential interest rate cuts has also weighed on the market as traditional finance becomes more involved.
“Given that uncertainty, my approach is simple: I buy the market,” Hougan said, specifying that he invests in a market-cap-weighted crypto index fund.
He added that crypto will likely be far more significant in a decade, with the market potentially expanding up to 20-fold. Hougan also cited SEC Chair Paul Atkins’ recent comment suggesting the U.S. financial system could embrace tokenization “in a couple of years.”
“Stablecoins will become more important. Tokenization will become more important. Bitcoin will matter more. And I expect a dozen other major use cases to emerge, including prediction markets, decentralized finance (DeFi), privacy tech, and digital identity,” Hougan said.
“I don’t want to risk backing the wrong chain,” he added. “Even if you pick a market that rises 100,000x, you could still underperform if you bet on the wrong project.”
“That’s why I make a crypto index fund the core of my portfolio,” Hougan said, “so no matter how the market evolves, I maintain exposure to the potential winners.”
