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Moving Beyond Bitcoin with the KT5 Index

Indices

Written by Adam Morgan McCarthy

20/02/2025

    Welcome to the index in focus!

    Welcome to the Index in Focus! This week we’re looking at one of Kaiko Indices Blue Chip product, the Kaiko 5 Index. The benchmark tracks the top five assets in our list of vetted tokens, while still offering diversified returns. In the full report we explore:

    • The performance of EGLX and its constituent assets.

    • How the U.S. election was a key driver of growth

    • The outlook for U.S. related assets.

    Introduction

    The KT5 (Kaiko Top 5) is a multi-asset benchmark designed to track leading digital assets while minimizing concentration risk and single points of failure. As of the first quarter of 2025, its constituent assets are BTC, ETH, SOL, DOGE, and XRP. The chart below provides a breakdown of the weighting as of the last rebalance.

    Screenshot 2025-02-20 at 15.18.09

    The KT5 achieved log returns of over 160% since the beginning of 2023, outperforming ETH by around 50 percentage points. Although the index might have underperformed BTC recently, it has outperformed in early 2023, and in the month after the U.S. election, the index grew at a greater rate than BTC.

    Screenshot 2025-02-20 at 15.37.15

    Busting correlation myths

    Skeptics of crypto indices argue that the industry is too highly correlated, diminishing the value of index investing. However, an analysis of the return correlations among the constituent assets in the KT5 reveals significant variation.

    While some pairs, such as BTC and ETH, exhibit high correlation, this is not universally true. For example, SOL has a very low correlation (0.06) with DOGE, and XRP’s correlation with SOL is just 0.18.

    These differences demonstrate that crypto indices can offer meaningful diversification benefits. Explore the full report below.

    Download the Report.

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