Crypto glossary
ETF (exchange-traded fund)
An ETF, or exchange-traded fund, is an investment fund traded on a stock exchange; a spot crypto ETF holds the actual coins and tracks their price.
ETFs let investors gain exposure to an asset through an ordinary brokerage account, without managing wallets or private keys. A spot bitcoin ETF buys and holds bitcoin with a custodian, and its shares rise and fall with the bitcoin price, minus a yearly management fee.
After a decade of rejections, the US SEC approved the first spot bitcoin ETFs in January 2024, followed by spot ether ETFs in July 2024. Earlier US products, such as bitcoin futures ETFs launched in 2021, tracked futures contracts rather than the coins themselves. ETFs on other cryptocurrencies have followed since.
Daily inflows and outflows of these funds are closely watched as a measure of institutional demand. The trade-off for investors is that they own fund shares, not the underlying coins, and cannot withdraw or use them on-chain.
Example
An investor buys $5,000 of shares in a spot bitcoin ETF through a regular brokerage account. If bitcoin rises 10%, the shares gain roughly the same, minus a small management fee.
Related terms
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