Crypto Basics

What are Crypto ETFs and How it Works?

Learn everything about Crypto ETFs and how they work. Discover whether it is good to invest or not in this comprehensive guide.
Marcus K
7 Minutes
MIN

The ever-evolving world of cryptocurrency has introduced many investment options, with one of the latest being Crypto ETFs. But what exactly are they, and how do they function? 

This comprehensive guide delves into Crypto ETFs, ensuring you're well-equipped with actionable insights and up-to-date knowledge.

What is a Crypto ETF?

A Crypto ETF, or Cryptocurrency Exchange-Traded Fund, bridges traditional finance and the digital currency. At its core, a Crypto ETF is an investment fund and exchange-traded product listed on conventional stock exchanges.

Instead of buying individual cryptocurrencies directly and managing complex wallets and private keys, investors can purchase shares of a Crypto ETF. This fund then invests in and holds cryptocurrencies, mirroring their market performance. 

Whether tracking a single coin like Bitcoin or a diversified array of digital assets, Crypto ETFs offer a more accessible and regulated way for investors to gain exposure to the volatile cryptocurrency markets.

How Crypto ETFs Operate?

Grasping the functionality of Crypto ETFs is pivotal for any prospective investor. These funds, although reminiscent of traditional ETFs, come with their own set of distinct operations:

Cryptocurrency Reserves: Every Crypto ETF has a reserve of the actual digital currencies it represents, safeguarded in highly secure storage solutions. This real-world backing ensures the ETF accurately mirrors its underlying assets' performance.

Price Alignment: Whether representing a single cryptocurrency like Bitcoin or a compilation, these ETFs use well-established crypto indexes to ensure accurate price tracking.

Liquidity Mechanics: Large-scale institutional investors, often termed 'Liquidity Providers,' play a crucial role. They step in to buy or sell the ETF's shares, ensuring its market price stays close to the actual value of the underlying assets.

Dividend Distribution: Unlike direct cryptocurrency holdings, which don't yield dividends, some Crypto ETFs might offer dividend-like distributions sourced from network transaction fees or other avenues.

Types of Crypto ETFs

The landscape of Crypto ETFs is diverse, catering to various investment strategies and appetites.

Single-Crypto ETFs: These ETFs focus exclusively on one cryptocurrency. For instance, an ETF that only tracks Bitcoin would belong to this category. Investors looking to target the performance of a particular digital currency might opt for these.

Basket-Crypto ETFs: Offering a more diversified approach, these ETFs track a group or portfolio of cryptocurrencies. This can help spread risk, as the performance isn't reliant on just one digital asset. This type is ideal for those seeking broader exposure to the crypto market.

Themed Crypto ETFs: Some ETFs are tailored to specific themes or niches within the crypto world. For instance, ETFs focus on the DeFi sector or the burgeoning NFT space. These cater to investors with a specific interest or belief in the potential of particular crypto sectors.

Leveraged and Inverse Crypto ETFs: These are more complex and potentially riskier. Leveraged ETFs aim to amplify returns by using financial derivatives. 

On the other hand, inverse ETFs are designed to profit from a decline in the value of an underlying benchmark. Both types require a deeper understanding of market mechanisms and have heightened risks.

Each ETF type offers a unique risk-reward profile, catering to various investment strategies and objectives.

How to Invest in Crypto ETFs?

Investing in Crypto ETFs might seem daunting, but by following a structured approach, you can simplify the process:

Educate Yourself: Understand the mechanics of Crypto ETFs, their fee structure, and the cryptocurrencies they track. Some ETFs might focus on one crypto, while others offer a diversified portfolio.

Select a Reliable Brokerage: Opt for a trusted brokerage platform that accesses the desired Crypto ETFs. Many traditional brokerages have expanded their offerings to include these funds.

Diversify Wisely: Don't put all your eggs in one basket. Consider a mix of ETFs to balance out potential risks.

Stay Updated: The crypto market is ever-evolving. Regularly review your investments and adjust as market dynamics shift.

Potential Benefits and Risks of Crypto ETFs

Navigating the investment landscape of Crypto ETFs means understanding both the advantages they offer and the pitfalls to be wary of:

Benefits:

  • Simplified Exposure: Crypto ETFs grant investors entry into the digital currency world without the complexities of direct ownership.
  • Instant Diversification: ETFs tracking multiple cryptocurrencies spread risk, reducing the impact of a single asset's downturn.
  • Regulatory Oversight: Traded on conventional stock exchanges, these funds have a regulatory safety net, enhancing trust.
  • Familiar Investment Vehicle: For traditional investors, Crypto ETFs offer a known structure akin to other ETFs they might have encountered.
  • Liquidity: Due to their tradable nature on exchanges, they often provide better liquidity than some crypto assets.

Risks:

  • Market Volatility: Cryptocurrencies are inherently volatile, and ETFs tracking them are not immune to these fluctuations.
  • Operational Fees: Crypto ETFs may carry management fees that could erode returns over time.
  • Regulatory Shifts: The evolving nature of crypto regulations could affect ETF operations or availability.
  • Market Sentiment: Rapid changes in investor sentiment can lead to unpredictable ETF price movements.
  • Limited Track Record: As relatively new instruments, their long-term performance and resilience are yet to be fully established.

Why Crypto ETFs are Gaining Popularity?

Crypto ETFs have gained traction for several reasons:

Accessibility: They provide an entry point for traditional investors to gain exposure to the crypto market without owning digital assets.

Diversification: Some ETFs track multiple cryptocurrencies, providing instant diversification across the volatile crypto market.

Regulation: Being traded on stock exchanges means they fall under traditional financial systems' scrutiny and regulatory framework.

Is It Good to Invest in a Crypto ETF?

Investing in a Crypto ETF offers a balanced entry into the dynamic world of digital currencies. For those wary of direct crypto ownership, these ETFs provide a more regulated and accessible avenue. They combine the diversification benefits of traditional ETFs with the potential growth of the crypto sector. 

However, like all investments, they come with risks—chief among them being the inherent volatility of cryptocurrencies. Investors must thoroughly research their risk tolerance and investment horizon before diving into any Crypto ETF.

Frequently Asked Questions

Q1. How do Crypto ETF fees compare to traditional ETFs?

While fees vary across different ETFs, it's not uncommon for Crypto ETFs to carry slightly higher management fees due to the specialized nature of the asset class and the need for additional security measures.

Q2. Can I redeem my Crypto ETF shares for the actual cryptocurrency?

Individual investors cannot typically redeem Crypto ETF shares for the underlying cryptocurrency. They can, however, sell their ETF shares on the stock market.

Q3. Are there tax implications when investing in a Crypto ETF?

Like other investment vehicles, Crypto ETFs can have tax implications, especially when selling shares or receiving distributions. It's crucial to consult with a tax advisor to understand specifics.

Q4. How secure are the cryptocurrencies held within a Crypto ETF?

Crypto ETFs prioritize security, often employing advanced custody solutions to protect the underlying assets. This might include cold storage, multi-signature wallets, and other advanced security protocols.

Q5. Do Crypto ETFs offer exposure to emerging or lesser-known cryptocurrencies?

While many Crypto ETFs focus on well-known cryptocurrencies like Bitcoin and Ethereum, some ETFs may provide exposure to altcoins or newer projects, depending on the ETF's objective.

Q6. How does the regulatory environment affect Crypto ETFs?

The regulatory landscape for cryptocurrencies is evolving, and any changes can directly impact Crypto ETFs. This might involve approval processes, operational guidelines, or the overall availability of such ETFs.

Q7. Is the performance of a Crypto ETF identical to its underlying assets?

While Crypto ETFs aim to mirror the performance of the underlying assets, there might be minor discrepancies due to fees, tracking errors, or the ETF's management strategies.

Q8. Can I use Crypto ETFs for my retirement or 401(k) plan?

Some retirement accounts and 401(k) plans may allow for ETF investments, including Crypto ETFs. However, consulting with a financial advisor to understand specific allowances and potential benefits is essential.

The Bottom Line

Crypto ETFs offer an exciting bridge between traditional finance and the burgeoning space of cryptocurrencies. They present an accessible avenue for newcomers and seasoned investors to delve into digital assets with the familiar framework of stock exchange trading. As with all investments, understanding the associated risks is paramount.

Remember, the cryptocurrency landscape is dynamic, with frequent shifts and developments. Staying informed and making decisions grounded in research and sound understanding will always be your best strategy.

Disclaimer

The information provided on this website does not constitute investment advice, financial advice, trading advice, or any other sort of advice and you should not treat any of the website's content as such.

Token Metrics does not recommend that any cryptocurrency should be bought, sold, or held by you. Conduct your due diligence and consult your financial advisor before making investment decisions.

Build Smarter Crypto Apps &
AI Agents in Minutes, Not Months
Real-time prices, trading signals, and on-chain insights all from one powerful API.
Grab a Free API Key
Token Metrics Team
Token Metrics Team

Recent Posts

Research

Andrena and the Rise of DePIN: Decentralized Internet in 2025

Token Metrics Team
8 min
MIN

Introduction:
Decentralized Physical Infrastructure Networks (DePINs) are rapidly emerging as one of the most transformative sectors in the blockchain space. In 2025, projects like Andrena are pushing the boundaries of what’s possible by bridging real-world hardware with decentralized protocols. This blog takes a closer look at the DePIN thesis, Andrena’s approach, and why this project is on the radar of top investors and analysts.

What Is DePIN?

DePIN stands for Decentralized Physical Infrastructure Networks. It refers to blockchain-powered networks that coordinate real-world infrastructure using token-based incentives. Use cases include:

  • Wireless internet (e.g., Helium)
  • Sensor networks (e.g., WeatherXM)
  • Storage and compute (e.g., Filecoin, Akash, Arweave)
  • Energy grids (e.g., PowerPod)

In short, DePINs decentralize infrastructure deployment and management using blockchain-based coordination tools.

Why DePIN Matters in 2025

  1. Infrastructure Gaps: Billions remain unconnected to the internet or lack access to basic digital services. DePINs offer a way to close these gaps without reliance on centralized telecoms.
  2. Token Incentives for Network Participation: Hardware operators are rewarded for contributing bandwidth, compute, or coverage—creating a new economic model.
  3. Real-World Utility: Unlike speculative tokens, DePIN projects often provide visible, tangible value from day one.

Introducing Andrena: The Helium of the Internet?

Andrena is a DePIN project building a decentralized internet backbone through a combination of physical devices and blockchain protocols. The project is developing a hardware device called Black Box, expected to launch in July.

Key features:

  • Distributed, peer-to-peer wireless coverage
  • Web3 native incentives for node operators
  • No reliance on centralized ISPs
  • Tentative deployments in New York City, Mexico City, and Accra
  • Deep integration with Helium Network and its infrastructure

Andrena aims to give individuals and communities the power to run their own internet access points and be compensated in a decentralized system.

Why It’s Generating Buzz

Token Metrics researchers flagged Andrena as a top pick for long-term infrastructure exposure. Here's why:

  • Backed by Top VCs: In its upcoming Series B, Andrena is reportedly raising funds from major firms including Polychain Capital, Archetype, Wintermute, and Coinbase Ventures.
  • Mass Market Vision: The goal is not just to serve crypto-native users, but also everyday consumers who simply want affordable, decentralized internet access.
  • Multi-layered Integration: Andrena will offer both physical routers and a browser extension, enabling different levels of participation.

Strategic Partnerships and Rollout

The project is currently in soft-launch mode with localized pilots and is pursuing exchange listings later this year. While details remain limited, the focus is on building a global decentralized ISP layer—a radical shift from the existing internet access model.

Why Andrena Could Succeed Where Others Struggled

Previous attempts at decentralized internet often failed due to:

  • Poor hardware UX
  • Limited adoption outside of crypto users
  • Unclear monetization models

Andrena appears to be addressing these pain points with:

  • Consumer-grade devices
  • Partner integrations (e.g., Helium)
  • Clear token utility tied to network usage and coverage
  • A well-capitalized, experienced founding team

Risks and Unknowns

As with all early-stage infrastructure projects, there are risks:

  • Uncertain regulatory frameworks around ISPs
  • Capital intensity of hardware production and distribution
  • Network growth dependent on physical deployment
  • Limited token utility details at this stage

Investors and builders should stay informed as more information becomes public.

How Token Metrics Is Tracking DePIN Growth

The Token Metrics platform is actively monitoring the DePIN space through metrics such as:

  • TVL (Total Value Locked) in related ecosystems
  • Developer activity and GitHub velocity
  • On-chain signal strength and token accumulation
  • Fundamental and technical ratings

Projects like Andrena and its ecosystem partners are closely watched for early indicators of momentum.

Final Thoughts

DePIN is one of the most compelling frontiers in crypto. It offers real-world, real-time applications that go far beyond speculation. Andrena is at the center of this movement, blending telecom hardware, Web3 incentives, and global deployment.

While it's still early, the signs are promising. From reputable backers to ambitious global plans, Andrena is a project worth watching in 2025 and beyond.

Research

Meme Coins in 2025: Why They’re Still Outperforming the Crypto Market

Token Metrics Team
8 min
MIN

Introduction:
Even in a sluggish crypto market, meme coins continue to outperform many other asset classes. In 2025, these highly speculative assets are not only surviving—some are thriving. This blog examines the current state of the meme coin market, what’s driving the activity, and how on-chain data and crypto analytics can help decode the chaos.

Meme Coins: Still Relevant in 2025?

Despite a broadly bearish macro environment, meme coins remain among the few bright spots in the crypto market. In the latest Token Metrics research webinar, several meme tokens showed outsized returns, including:

  • Gorbagana – up over 50% in a day
  • Useless Coin – jumped 40% in 24 hours
  • Startup Coin – nearly 9x returns over the past month

These tokens operate at low market caps and often launch with little or no formal whitepaper or utility. However, the power of narrative, social engagement, and rapid speculation continues to drive short-term gains.

Why Meme Coins Are Performing in a Bear Market

1. Low Liquidity, High Volatility:
Small-cap meme tokens can easily generate parabolic moves with modest capital inflows.

2. Community-Led Narratives:
Tokens like Useless Coin and Startup thrive on viral momentum from crypto-native communities, particularly on X (Twitter) and Telegram.

3. Whale Activity as a Signal:
Token Metrics analysts observed that whales have been accumulating select meme coins. This isn’t an endorsement—but it’s a data point. Monitoring on-chain whale behavior offers clues about where smart money is moving.

The Gobagana Case Study

Gobagana was cited as a high-risk Solana fork with minimal public information, yet it rapidly gained traction. On-chain analysis revealed:

  • Whale wallets accumulating in the early phase
  • Early VC insiders (e.g., those connected to Big Brain VC) engaging with the token
  • Rapid social engagement despite a small follower base

The takeaway? Even opaque meme coins can trigger major rallies—particularly if accumulation patterns align with social volume.

Risk Management and Red Flags

The meme coin market is not without risk. The Token Metrics team emphasized several cautions:

  • Illiquidity: Many meme tokens have low volume and limited exchange listings.
  • Exit scams or soft rugs: Teams can abandon the project after price pumps.
  • Price discovery volatility: Tokens may have no clear valuation baseline and can retrace sharply.

As such, these assets are often best approached with a high-risk tolerance and clear entry/exit rules.

How to Track Meme Coins Like a Quant

Using crypto analytics platforms like Token Metrics can help make sense of meme coin volatility. Tools that help include:

  • Real-time sentiment analysis
  • Whale wallet tracking
  • Price-to-volume anomaly detection
  • Bullish/bearish signal tracking

In 2025, data is more important than hype. While memes may dominate the narrative, only data reveals when the momentum shifts.

Meme Coins vs. Infrastructure Projects

Interestingly, while meme coins have been surging, many infrastructure or protocol tokens remain flat. This divergence suggests that retail attention is still focused on short-term speculation.

That said, once Bitcoin breaks key resistance levels, we could see capital rotate into AI, DeFi, and infrastructure themes. Meme coins may be the “canary in the coal mine” indicating renewed retail appetite.

Final Thoughts

Meme coins remain the wild west of crypto—but they aren’t going away. In fact, they’re becoming more sophisticated, with deeper liquidity pools, faster launches, and increased integration with social media bots and automated token creators.

As always, meme coin trading demands discipline, skepticism, and a robust toolkit. Watch the whales, follow the data, and never trade what you don’t understand.

Research

How to Find Hidden Crypto Gems with 100x Potential (Step-by-Step Guide) | Token Metrics Moonshots

Token Metrics Team
8 min
MIN

In the fast-paced world of cryptocurrency, discovering hidden gems—often called moonshots—can lead to life-changing returns. But the real challenge lies in separating hype from actual potential. In this guide, we’ll break down what crypto moonshots are, how they work, and how you can use Token Metrics to reliably find tokens with 100x upside.

What Are Moonshot Tokens?

The term moonshot comes from the idea of a crypto token “going to the moon,” or rapidly increasing in price. These are usually low-cap tokens with a compelling narrative, innovative technology, or early-stage market presence that give them high upside potential.

Key Characteristics of Moonshot Tokens:

  • Market Cap Below $50M – Smaller market caps have more room to grow.
  • High Risk / High Reward – Volatility is expected, but the upside can be enormous.
  • Early Entry – Timing matters. Getting in early before mainstream awareness is key.
  • Backed by Fundamentals – Even moonshots need solid technology, use cases, or backing.

How Do Crypto Moonshots Work?

Moonshots rely on the combination of innovation, market timing, and community adoption. They often start unnoticed, then experience exponential growth once crypto traders and influencers catch on.

The Lifecycle of a Typical Moonshot:

  1. Discovery Phase – A few savvy investors or analysts spot the token.
  2. Accumulation Phase – Early adopters buy in quietly, keeping prices low.
  3. Breakout Phase – News spreads, and trading volume spikes.
  4. Parabolic Run – FOMO (Fear of Missing Out) kicks in, driving price up rapidly.
  5. Profit-Taking or Collapse – Smart traders exit with gains; latecomers may be left holding the bag.

To avoid the trap of hype-driven tokens, it's essential to use data and analytics, not emotions. That’s where Token Metrics becomes your secret weapon.

How to Use Token Metrics to Find Monshots?

Token Metrics is an AI-powered crypto analytics platform that helps you discover high-potential tokens with real-time data, grades, and backtested indicators. Here’s a step-by-step guide to using Token Metrics to uncover 100x opportunities:

Step 1: Go to the Ratings Page

Start from the main dashboard of the Token Metrics app.

  • Navigate to the “Ratings” tab.
  • This page ranks thousands of tokens using AI-based Trader Grade and Investor Grade, factoring in technical indicators, on-chain metrics, sentiment, and more.

Pro Tip: Look for tokens with rising Trader Grades and strong historical performance.

Step 2: Click on the “Moonshots” Tab

Once you’re in the Ratings section:

  • Click the “Moonshots” tab at the top of the page.
  • This will filter the list down to tokens the AI model flags as having moonshot potential—i.e., tokens likely to perform exceptionally well in the short term.

These are automatically generated by Token Metrics AI models using over 80+ data points, including:

  • Price momentum
  • On-chain activity
  • Sentiment analysis
  • Volume spikes
  • Market structure

Step 3: Review Key Moonshot Metrics

Each Moonshot token is presented with a rich dataset to help you make informed decisions:

  • Trader Grade (with % change in past 24h or 7d)
  • 24H Trading Volume – Gauge market interest
  • Market Cap – Lower caps typically offer more upside
  • Date of Entry – See when the token was first flagged
  • Live ROI Since Moonshot – Know exactly how past picks performed

Bonus Feature: Toggle to “Past Moonshots” to review previous winners and assess the track record of the platform.

Step 4: Choose a Token to Explore

Click on any token in the Moonshots list to open its Token Details Page.

Here, you can:

  • Analyze real-time charts
  • Review fundamentals, like project utility, tokenomics, roadmap, and team
  • See top holders and whale activity
  • Examine price volatility and volume patterns

This is where research and intuition meet. Use the available data to decide if this token fits your risk tolerance and investment thesis.

Step 5: Buy in Seconds

Token Metrics makes the process seamless:

  • Just click the “Buy” button on the Moonshots page.
  • This opens a swap widget powered by integrated DEX aggregators.
  • Choose your wallet, approve the transaction, and you're done—no need to leave the platform.

This integration eliminates the hassle of going to third-party platforms to execute trades, saving time and reducing risk.

Why Use Token Metrics for Finding Moonshots?

Token Metrics isn’t just about flashy picks—it’s about using data science and AI to gain an edge.

Key Benefits:

  • AI-Driven Insights – No emotional bias; just pure data analysis.
  • Transparency – View past moonshot performance, live ROI, and update dates.
  • Speed to Trade – Instant buy options right from the dashboard.
  • Performance Tracking – Evaluate your results based on entry/exit signals.

Real Examples: Token Metrics in Action

  • Euler Finance was flagged as a Moonshot before its 30% rally—validated by a bullish AI signal.
  • Morpho gained traction after appearing in the Moonshots list, later becoming a top TVL gainer.
  • Hyperliquid made the list before capturing major perp trading market share.

By combining early AI alerts with your own due diligence, you can position yourself ahead of the crowd.

Final Thoughts

Finding the next 100x crypto gem doesn’t have to be a guessing game. While the crypto space remains volatile, tools like Token Metrics help stack the odds in your favor. From real-time ratings to instant buy options and performance metrics, you have everything you need to make smart, data-driven bets on the future of crypto.

So if you're serious about turning small investments into big wins, start using Token Metrics to uncover moonshots before they go mainstream.

Try Token Metrics today and unlock the power of AI-driven crypto investing.

Choose from Platinum, Gold, and Silver packages
Reach with 25–30% open rates and 0.5–1% CTR
Craft your own custom ad—from banners to tailored copy
Perfect for Crypto Exchanges, SaaS Tools, DeFi, and AI Products