Definition ∞ Crypto indices are benchmarks that track the performance of a group of digital assets. These indices aggregate price data from multiple cryptocurrencies, providing a standardized measure of market sentiment or specific sector performance within the digital asset economy. They serve as tools for investors to gauge market trends, diversify portfolios, or develop index-based investment products. The construction of such indices often involves market capitalization weighting or other methodologies to reflect market dynamics accurately.
Context ∞ Crypto indices are gaining prominence as institutional investors seek regulated and familiar investment vehicles within the digital asset market. The creation of new indices and their inclusion in traditional financial products, like exchange-traded funds, is a frequent topic in financial news. Discussions often revolve around the methodologies used for index construction and their representativeness of the broader crypto market.
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