With additional analysis from Adrian Fritz
In 1976, Vanguard launched the first index fund available to individual investors. It aimed to raise $150 million, raised $11.3 million, and was nicknamed “Bogle’s Folly”.1 Today, passive funds hold about 55% of US fund assets, $19.4 trillion at year-end 2025.2
Owning the market was not a new idea. What changed was the wrapper: a low-cost, standardized product that gave individual investors a strategy previously limited to institutions.3 The product came first, and the capital followed.
Crypto has already lived through its stock-picking era
Until 2016, crypto was essentially Bitcoin, with more than 80% of the market. The 2017 boom in new token issuance cut that share to 37% by January 2018. Most of those projects failed, and Bitcoin’s share recovered above 70% by 2019. DeFi and NFTs pushed it back to around 40% in 2020 and 2021. Since the 2022 bear market it has climbed again, to 71% in June 2025 and 68% today.4
The dispersion shows up in the numbers. Since March 2020, the market value of assets outside the top 10 grew almost fifteenfold, against roughly tenfold for Bitcoin. It then fell 84% from peak to trough, against 76% for Bitcoin. (Market values include newly launched tokens and are not investable returns.) At the token level the spread is wider: Solana rose more than 11,000% in 2021 and fell 94% in 2022, while Ethereum rose 399% in 2021 and then lagged Bitcoin in each of the next four years. Bitcoin fell less than the rest of the market in every major bear market since 2018, and the rest outpaced it in two of the last three bull markets. No one segment has led every phase.4
Passive already dominates. 93% of US crypto mutual fund and ETF assets sit in passive strategies, although the largest are single-coin Bitcoin and Ethereum funds.5 Holding digital assets beyond the largest without picking winners is the problem equities solved with indexing.
Institutions need a wrapper before they need a view
Institutional capital needs custody it can audit, regulatory standing, daily liquidity, and reporting that fits existing systems. ETFs provide that: registered securities under SEC oversight, held with qualified custodians, traded in a standard brokerage account. This reduces operational and counterparty risk. It does not remove price volatility.
Index-tracking ETFs add a second layer: a published, rules-based methodology. Established index providers are now building it for crypto.
The market has changed since US spot ETFs arrived in January 2024. ETFs, companies, and governments have absorbed about 1.75 million bitcoin, roughly 3.4 times miner output, and Bitcoin’s average three-month volatility has fallen from 57% to 38%.4 Activity beyond Bitcoin is building too: stablecoin supply is near $300 billion, and trading in tokenized real-world assets rose from $0.12 trillion to $2.58 trillion between Q1 and Q3 2026. No single network is likely to capture all of it, which is the logic that made broad equity indexes the default.
A rules-based index ETF gives investors a repeatable answer to “which coins?”, a methodology they can evaluate instead of a basket of token calls, and an allocation that is simpler to explain, document, and review than individual token views.
Footnotes
- Morningstar, “The Index Fund Turns 50: How Jack Bogle Changed Investing Forever” (global.morningstar.com/en-gb/funds/index-fund-turns-50-how-jack-bogle-changed-investing-forever)
- Morningstar, “The Bright Spot for Actively Managed Funds Amid a Dire Picture” (morningstar.com/funds/bright-spot-actively-managed-funds-amid-dire-picture). Year-end 2025.
- Vanguard, “50 years, 50 facts: indexing since 1976” (corporate.vanguard.com).
- Alpian and 21shares, “Bitcoin First, Then the Curve,” Q4 2026 (draft, 8 Nov 2026), Figures 8 and 10 to 14. CoinGecko prices; TradingView CRYPTOCAP market values excluding stablecoins; data to 30 Oct 2026.
