On July 9, 2026, the Bitwise 10 Crypto Index ETF (BITW)—one of the world’s largest cryptocurrency index funds—completed its latest monthly rebalancing. The results were both surprising and expected: Polkadot (DOT) and Avalanche (AVAX) were removed from the portfolio, while Hyperliquid (HYPE) and Stellar (XLM) joined as new constituents.
BITW operates much like a traditional stock market index fund—it automatically holds the top ten eligible crypto assets by market capitalization and rebalances monthly. Each adjustment isn’t just a reshuffling of names; it’s an institutional-level ranking that reflects shifts in capital flows, asset attention, and ecosystem trends within the market.
As of July 10, 2026, after the adjustment, BITW’s holdings are still dominated by Bitcoin (BTC) at 77.54%. Ethereum (ETH) accounts for 13.04%, XRP for 4.21%, and Solana (SOL) for 2.78%. HYPE now ranks as the fund’s fifth-largest holding with a 0.93% allocation, followed by XLM at 0.38%.
This portfolio shift reveals a deeper change in how institutional investors assess crypto asset value—moving from a focus on Layer 1 blockchain narratives to the application value of on-chain financial infrastructure.
Why Did Bitwise Adjust BITW’s Constituents?
BITW tracks the Bitwise 10 Large Cap Crypto Index, a rules-based index rather than one based on subjective stock picking. Its core selection criteria include market capitalization ranking, liquidity, and investability. During each monthly rebalance, the index automatically removes assets that no longer meet the thresholds and adds newly qualifying ones.
This means changes in constituents are the direct output of a quantitative ruleset, not the subjective judgment of the Bitwise investment committee. In fact, because the rules are transparent and predictable, each rebalance more accurately reflects shifts in the market structure—assets that are growing or shrinking are directly mirrored in the index composition through their market cap rankings.
Currently, HYPE ranks 10th among all cryptocurrencies by market cap, at around $15.144 billion. DOT’s market cap has dropped to 68th place (about $1.442 billion), and AVAX is now 40th (about $2.937 billion). According to BITW’s rule of holding only the top ten largest assets, DOT and AVAX’s exclusion is a natural result of their market cap declines.
But market cap rankings are just the surface. Market cap itself is a discounted reflection of the market’s expectations for an asset’s future value—HYPE surpassing DOT and AVAX signals a fundamental shift in how the market values on-chain trading platforms versus Layer 1 blockchains.
Why Did HYPE Catch Institutional Attention?
HYPE’s inclusion is the highlight of this rebalance and marks a pivotal shift in institutional investment logic—from an "infrastructure narrative" to an "application value narrative."
Hyperliquid is a decentralized perpetual contract trading platform that uses an on-chain order book model, focusing on high-performance trading experiences. In the first half of 2026, the platform processed $1.34 trillion in trading volume and generated $320 million in protocol revenue. The HYPE token has surged 165% year-to-date, hitting an all-time high of $76.70 on June 16.
These numbers point to a core fact: the crypto market is transitioning from "infrastructure competition" to "application value competition."
In recent years, the dominant narrative was the Layer 1 blockchain race—Ethereum, Solana, Avalanche, and Polkadot each told their own technical stories, and capital bet on which chain would become the mainstream infrastructure. Hyperliquid’s rise offers another path: a project doesn’t need to be a general-purpose Layer 1. By focusing on a vertical niche (such as on-chain derivatives trading) and achieving strong product-market fit, it can create significant protocol value.
Institutional recognition of HYPE is also on the rise. On May 15, 2026, Bitwise launched a dedicated spot Hyperliquid ETF (BHYP) with a 0.34% management fee and staking options. Cumulative net inflows into HYPE-related ETF products have surpassed $100 million. This indicates that institutional focus on on-chain trading infrastructure is moving from the periphery to the mainstream.
However, HYPE’s supply structure warrants attention. Its total supply is 1 billion tokens, with only about 22% currently in circulation. The fully diluted valuation approaches $64 billion. Future token unlocks could impact price—a dilution risk not present with BITW’s Bitcoin and Ethereum holdings.
Why Were DOT and AVAX Removed?
DOT and AVAX’s removal from BITW isn’t due to project "failure," but rather a reflection of shifting capital preferences as seen in market cap rankings.
Polkadot once led the narrative with cross-chain interoperability and a multi-chain ecosystem, reaching an all-time high of $54.98 in November 2021. But today, the market’s focus has shifted from "how chains connect" to "what applications are running on-chain, how many users are there, and how much capital is flowing." DOT is currently priced at about $0.8522, down roughly 98% from its peak, with its market cap ranking falling to 68th.
Avalanche gained favor with its subnet architecture and enterprise blockchain positioning, breaking $144 in November 2021. But competition in the Layer 1 space has intensified, and new ecosystem capital is clearly dispersing. AVAX is now priced around $6.803, down about 95% from its peak, ranked 40th by market cap.
It’s important to note that both networks continue to see active technical development, staking ecosystems, and on-chain activity. They were included in BITW when it listed on the NYSE Arca in December 2025 and remained in the portfolio for about six months. Their removal from the index reflects a preference for faster-growing assets, not a dismissal of their technical capabilities.
What Does XLM’s Inclusion Signify?
Stellar (XLM)’s addition is also noteworthy. XLM currently has a market cap of about $6.49 billion, ranking 24th among all crypto assets. While it isn’t in the top ten by market cap, it met Bitwise’s eligibility criteria for inclusion.
Stellar has long positioned itself as a cross-border payments and financial infrastructure network, focusing on stablecoin transfers and real-world payment scenarios. With RWA (real-world assets), stablecoins, and global payments back in the spotlight, XLM’s inclusion reflects renewed institutional interest in blockchain networks with real-world financial connectivity.
XLM is trading at $0.19009 today, up 4.56% in 24 hours and 3.80% over the past 30 days. Although it’s down 37.30% over the past year, its established presence in payments and its partner network continue to give it unique institutional appeal.
What New Trends Are Institutions Watching in Crypto Investing?
BITW’s latest rebalance sends at least three key market signals:
First, the narrative is shifting from blockchains to applications. Previously, institutions prioritized "which Layer 1 will become the next-generation internet infrastructure." Now, they are focusing on concrete financial applications—on-chain trading platforms (Hyperliquid), payment networks (Stellar), and other protocols that directly generate revenue, attract users, and drive trading volume.
Second, the focus is moving from technical competition to user demand. The core metrics for evaluating projects are shifting from "how advanced is the technology" to "how many users, how much trading volume, and how much revenue." HYPE’s $1.34 trillion in trading volume and $320 million in revenue are more compelling to institutions than any technical whitepaper.
Third, RWA and on-chain finance are becoming long-term themes. Stablecoins, RWA, DeFi infrastructure, and on-chain trading are now central to institutional portfolios. The rise of XLM and HYPE both point to a trend: crypto projects that bridge traditional finance and real-world economic needs are gaining increasing institutional recognition.
Conclusion
Bitwise BITW’s monthly rebalancing is essentially a regular snapshot of changing market structure. The removal of DOT and AVAX doesn’t mean their technology has lost value; the addition of HYPE and XLM doesn’t mean they’re risk-free.
What truly matters is the direction of the trend: institutional capital is moving away from broad Layer 1 blockchain narratives and toward the value validation of on-chain financial applications. Hyperliquid’s $1.34 trillion in trading volume and 165% annual gain, along with Stellar’s long-term positioning in cross-border payments, highlight a clear direction—the next phase of the crypto market belongs to financial applications that generate real revenue and serve real needs.
For investors tracking institutional allocation trends, BITW’s portfolio changes offer a rare window into the market. When an index fund speaks through market cap rankings, it’s telling us in the simplest terms—this is where the money is flowing.
FAQ
Q1: How often does Bitwise BITW rebalance its portfolio?
BITW uses a monthly rebalancing mechanism, automatically adjusting holdings each month based on market cap rankings, liquidity, and investability. The July 9, 2026 adjustment was a routine operation under this mechanism.
Q2: What is HYPE’s weight in BITW?
According to Bitwise’s published rebalance results, HYPE was added to BITW with a 0.93% allocation; XLM’s weight is 0.38%. HYPE is now the fund’s fifth-largest holding, ahead of Cardano, Chainlink, Litecoin, and Sui.
Q3: Could DOT and AVAX return to BITW in the future?
It’s possible. BITW’s index is rules-based—if DOT and AVAX’s market cap rankings return to the top ten, they could be re-included. This would require renewed market recognition through user growth, application activity, and capital inflows.
Q4: What are Hyperliquid’s main risks?
The primary risk comes from token supply structure. HYPE has a total supply of 1 billion tokens, with only about 22% currently in circulation. The remaining 780 million tokens will be gradually unlocked in the future. These unlocks could put downward pressure on price—a dilution risk not present for Bitcoin and Ethereum in BITW’s portfolio.
Q5: Which crypto sectors are institutions focusing on now?
Institutional capital is shifting from broad Layer 1 blockchain narratives to the value validation of on-chain financial applications, with a focus on protocols that generate real revenue. This includes on-chain trading platforms (like Hyperliquid), cross-border payment networks (like Stellar), RWA, and stablecoin infrastructure.
