Challenges Facing Mid-Cap Cryptocurrencies In 2025

According to CoinDesk, mid-cap cryptocurrencies are facing significant challenges, with investors often finding themselves unrewarded in their pursuit of potential hidden gems within this market segment. Despite the allure of discovering future powerhouses, mid-caps have exhibited higher volatility and less reward, posing a conundrum for investors. This situation raises questions about whether it mirrors the dominance of major players in equities, a lack of promising assets in the mid-tier, or simply the delayed fruition of the future of finance. The CoinDesk 20 and CoinDesk 80 indices are used to define size segments within the digital asset market. CoinDesk 20 tracks the performance of top digital assets, excluding memecoins, and ensures access to U.S. investors with select exchange listings and liquidity in specific pairs. CoinDesk 80, on the other hand, includes the next 80 assets outside of CoinDesk 20, which are still large and liquid but with fewer restrictions and more trading pairs. Both indices have a base date of October 4, 2022, and a base value of 1000. As of now, CoinDesk 20 has achieved a 320% return, while CoinDesk 80 has experienced a 3% loss. The volatility of CoinDesk 80 surpasses that of CoinDesk 20, although its patterns align with those of major cryptocurrencies like bitcoin and ether. The mid-cap segment includes well-known names, despite some highly volatile memecoins. Analyzing the year-to-date performance of current constituents, only one has shown an increase, while many familiar names have lagged. Identifying the root cause of mid-cap underperformance remains challenging, akin to other asset classes. While the Fama-French factors suggest small-cap equities should outperform, this has not consistently been the case in practice. The crypto community tends to invest in the largest, longest-established, and most familiar names, with regulatory accommodations such as ETFs following this trend. This pattern may suggest that a large-cap tilt in digital asset investing could potentially yield excess returns. However, the future remains uncertain, and investors continue to monitor the values of CoinDesk 20 and CoinDesk 80 for further insights.