For years, the S&P 500 has been the most important benchmark for mainstream U.S. investing. But in a move that is turning heads on Wall Street and beyond, the index now includes Coinbase Global, Inc. (COIN) as its first crypto-native member.
If you invest in an S&P 500 index fund, you now have a stake in the world of digital assets, whether you planned to or not. Our analysis below helps you understand what this means for your portfolio.
Key Takeaways
- Coinbase, the largest U.S. crypto exchange, is the first crypto-native company to join the S&P 500.
- The move signals growing mainstream acceptance of crypto but also introduces new volatility and regulatory risks to the index.
- Coinbase represents a very small percentage (about 0.11%) of the S&P 500’s total value.
Crypto’s Big Leap Into the Mainstream
Cryptocurrencies and their exchanges have long been viewed as speculative outliers. That changed in May 2025, when Coinbase officially joined the S&P 500, replacing Discover Financial Services, which merged with Capital One Financial Corporation (COF).
The move marks the first time a company rooted in blockchain finance sits alongside giants like Apple Inc. (AAPL) and JPMorgan Chase & Co. (JPM). “Coinbase joining the S&P 500 means crypto’s here to stay,” said Coinbase CEO Brian Armstrong.
How Coinbase’s Inclusion Changes the Game
Coinbase’s inclusion in the index caused shares to jump and could lead to billions in buying from both passive and active funds, based on some estimates. That will bolster its liquidity and help stabilize its share price over time, while also serving as a vote of confidence for the crypto industry.
However, crypto assets are still volatile, and their inclusion in the benchmark index does little to change this. Bitcoin, which first reached $100,000 in 2024, dropped about 38% between early February 2025 and mid-April 2025, but then gained about 40% between mid-April and the end of May 2025.
Fast Fact
Coinbase represents (as of late May 2025) about 0.11% of the S&P 500’s total value. That means if you have $10,000 in an S&P 500 fund, only about $11 is now tied to the crypto exchange. It’s a small slice—ranking about 180th in the index by market cap—but could be just the beginning for crypto-related assets.
What the Data Tells Us
Here’s what Investopedia’s analysis reveals: Over the past five years, bitcoin and the S&P 500 have moved in the same direction about 40% of the time (a correlation of 0.38 from the beginning of 2020 to late May 2025). That might not sound like much, but it’s actually a significant relationship in the investing world. And during moments of market panic, like the massive sell-offs after the initial Trump tariff announcement in April 2025, that connection jumped to nearly 90%, before settling down to about 70% (or 0.70) for the entire month. Crypto, in short, has largely failed to act as the “hedge” for the stock market that its proponents once promised.
For Coinbase, specifically, its stock price has followed the S&P 500’s movements about half the time (the correlation was 0.53), virtually the same as its movements in relation to bitcoin (0.54), between its initial public offering in 2021 and late May 2025.
What does this mean for you? If you thought your retirement account was safely diversified in boring old blue-chip stocks, think again. Your portfolio now has a direct line to the crypto rollercoaster, whether you bought a single bitcoin or not.
Pros and Cons: What Coinbase Brings to the S&P 500
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Mainstream legitimacy: Coinbase’s inclusion could pave the way for other blockchain-based companies to join the index.
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More risk/more potential rewards: Some crypto assets have outperformed traditional equities over the past decade.
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Broader access: Millions get exposure without buying crypto directly.
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Increased volatility: Crypto’s price swings could inject more turbulence into the S&P 500.
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It’s still crypto: Coinbase still faces ongoing regulatory investigations and cyber threats.
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Contagion risk: Stronger crypto-stock connections could amplify market shocks.
The Bottom Line
Coinbase’s inclusion in the S&P 500 could mark yet another turning point for Wall Street’s relationship with the crypto industry. Investors in index funds and retirement accounts are now, by default, exposed to the ups and downs of digital assets.
While this brings new opportunities for growth and diversification, it also means the S&P 500 is a little less insulated from crypto’s wild swings.
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