Another factor in index construction, which is more unique to crypto, is market eligibility criteria.
Due to the decentralized nature of crypto, prices are quoted on a variety of centralized and decentralized exchanges. This creates conditions where assets are priced differently across exchanges. For example, during much of Bitcoin’s trading history, prices have been markedly higher in Korea than elsewhere in the world, creating a condition more commonly called the “Kimchi Premium.”
Exchanges solely in the US have also faced issues of major price dislocations due to supply/demand dynamics. Furthermore, many exchanges offer limited market data and history. Thus, to ensure data integrity, Coin Metrics only includes data from the highest quality exchanges for each asset when constructing its single asset indexes.