Exchange-Traded Funds

Definition ∞ Exchange-traded funds are investment funds that are traded on stock exchanges, much like individual stocks. They typically hold a basket of assets such as stocks, bonds, or commodities, designed to track the performance of a specific index. In the context of digital assets, crypto exchange-traded funds allow investors to gain exposure to cryptocurrencies without directly holding the underlying assets. These funds offer a regulated and familiar investment vehicle for a broader audience.
Context ∞ The recent approval and subsequent performance of spot Bitcoin exchange-traded funds (ETFs) in major jurisdictions represent a significant development in the cryptocurrency market. Discussions are actively centered on the impact of these ETFs on Bitcoin’s price discovery, market liquidity, and adoption by traditional investors. Key debates involve the potential for regulatory arbitrage, the inflows and outflows of capital into these funds, and the future prospect of ETFs for other digital assets like Ethereum.