Sophisticated investors recognize the need to diversify portfolios, anticipating that as inflows into Bitcoin ETFs slow, so will volatility, reducing the potential for attractive risk-adjusted returns. Institutional investors are increasingly seeking exposure to a broader set of cryptocurrencies that complement traditional equity holdings, which is where index funds come in. Crypto index funds are investment vehicles that track the performance of a basket of various cryptocurrencies, offering investors diversified exposure to the digital asset market without the need to buy individual cryptocurrencies directly. Currently, over a dozen crypto index funds are marketed to investors, ranging from $1 million to several hundred million dollars in assets under management.
