Explained | All you need to know about crypto ETFs

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Cryptocurrencies burst onto the global scene with the aim of disrupting the world of money and finance with their decentralisation pitch coming across as a breather from the centralised, tightly-knit world of high finance.While for a long time, Wall Street remained skeptical about the promise of the change that crypto could bring about, it did not take time to look at crypto as yet another financial product that it could package and sell to interested buyers.The latest on the scene are crypto exchange traded funds or ETFs. Here’s an explainer on what they are all about.What are ETFs?Exchange-Traded Funds (ETFs) bear a lot of resemblance to mutual funds.

ETFs follow the movement of an underlying asset such as gold or an assortment of assets such as the NIFTY50. Borrowing from this concept, crypto ETFs are funds that track the movement of a single token or multiple crypto tokens.Like any other stock, ETFs can be traded on exchanges through a brokerage service.

This simplifies the process of portfolio diversification by providing investors easy access to an entire asset class. The buying and selling activity of investors results in price fluctuations, thus causing a movement in ETF prices daily.Also read: Top blockchains that are more decentralised than othersAs cryptocurrencies continue to rise in popularity, they are gradually taking up a larger share of global investments too.

This comes at a time when concerns surrounding inflation continue to mount, with the USA battling its highest inflation levels in decades.“Globally, it’s obviously a phenomenon that’s starting to take off,” Leah Wald, CEO of Valkyrie Investments, told Bloomberg in December 2021. Walk added that she had seen interest in crypto investment rise