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A Basket, commonly referred to as a crypto index fund in the cryptocurrency context, is a collection of multiple digital currencies managed as a single asset. This concept simplifies investment processes by reducing the need for investors to continuously monitor each individual currency. Baskets allow for the grouping of various cryptocurrencies, offering a unified token that can be traded on exchanges like standard cryptocurrencies.

Initially tailored for novice traders, crypto baskets have evolved to cater to experienced and large-scale investors. A typical basket may include a diverse range of cryptocurrencies, often selected based on specific themes or criteria, such as top proof-of-work (PoW) or proof-of-stake (PoS) currencies, or focusing on a particular sector like decentralized finance (DeFi).

Apart from direct cryptocurrency groupings, some crypto index funds adopt alternative approaches. For instance, the JPMorgan Cryptocurrency Exposure Basket tracks shares of companies that are significantly involved in cryptocurrency-related activities, rather than directly holding a group of coins.

The composition of a basket is variable, with certain assets potentially occupying a larger percentage of the total value. This allocation reflects the fund’s strategy and the perceived potential of the included assets. Baskets have become a popular tool for diversified crypto investment, offering a blend of simplicity and exposure to a range of digital assets.

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