A crypto index essentially follows the venture capital model - take many bets on the expectation that, even in the case of most bets going to zero, the winner makes up the difference multi-fold
We see crypto as an asset class whose risk profile lies (and oscillates) between mid-cap equities and early stage VC - this risk profile shows up in the volatility this asset class displays in a short time period
A pure momentum-based crypto portfolio would need to rebalance multiple times a day in a volatile crypto market, and would be more susceptible to investing at the top in a bear market.
There is a steep drop-off in the market cap of coins after the top few, and thus a drop-off in media coverage and accountability. A market-cap weighted portfolio does not take into account project legitimacy or other metrics.