Would you like to get into crypto trading without holding Bitcoin yourself? Here are some investment ideas
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Bitcoin has seen blockbuster growth over the past decade, skyrocketing in price, and has even been backed by major banks.
For many retail investors, however, this can be a complicated investment – it’s historically expensive, volatile, can’t be bought through a brokerage account, and isn’t backed by a financial institution.
“There are things you can do for indirect exposure,” said Tyrone Ross, investment advisor and CEO of Onramp Invest, a digital investment platform. “If people do that I think it’s better and safer before they actually start looking into the subject.” [bitcoin] Rabbit hole.”
There are a few ways people can invest in cryptocurrency and even bitcoin, or the technology behind it, without holding coins themselves. It may not completely protect investors from the volatility of the brands of cryptocurrency, but it does offer them some protection from losses.
Invest in companies that own Bitcoin or any other cryptocurrency
One way to get involved in Bitcoin without holding it is to invest in stocks of companies that offer cryptocurrency services or hold coins themselves, Ross said.
This includes a large group of publicly traded companies in various sectors that either have Bitcoin on their balance sheets or have services for storing or paying with cryptocurrency.
Recently, companies like Tesla and MicroStrategy have invested directly in Bitcoin. Tesla bought $ 1.5 billion worth of Bitcoin and said it would soon accept digital currency as a form of payment. MicroStrategy, an enterprise software company, plans to sell $ 600 million in convertible bonds and use the proceeds to buy bitcoin.
Check out companies with technology related to Bitcoin or blockchain
Another way for investors to get exposure to cryptocurrency is to invest in publicly traded companies that have technology for trading coins or that use blockchain, the technology that Bitcoin is based on.
Experts also called out companies like Square and Paypal that allow users to trade cryptocurrency on their platforms. Additionally, companies like Riot Blockchain and Galaxy Digital are focusing on the cryptocurrency and the technology behind it. Big tech names like Microsoft, IBM, Google, SAP and Amazon use blockchain in different areas of their business.
There is also underlying hardware that people could invest in to get crypto without holding coins.
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“Someone could also get involved in companies that make graphics processing units (GPUs) necessary for computers to solve the mathematical equations for blockchain technology,” said Anjali Jariwala, certified financial planner, CPA and founder of FIT Advisors in Torrance, California.
Investing in company stocks is much easier and likely safer than investing in a cryptocurrency. For one, this can be done through a regular brokerage account maintained by a financial institution, which gives the user additional security and ease of use. For example, if you’ve forgotten the password for a brokerage account, you can reset it – not if you’ve forgotten the key to your Bitcoin wallet.
Still, it cannot eliminate volatility, Jariwala said.
Take a look at a cryptocurrency fund
According to Doug Boneparth, CFP and President of Bone Fide Wealth in New York, it is also possible to invest in funds that contain Bitcoin and other cryptocurrencies.
There are a few players currently creating Bitcoin trusts, he said, referring to companies like Grayscale and Osprey that are helping retail investors navigate cryptocurrency.
“Buying in a fund wrapper is probably more familiar to the retail investor than anything,” he said. Additionally, working with a fund means contacting the company that manages the fund for any questions or account information you may need such as: B. setting a password, tracking profits and losses, or collecting documents to file your taxes.
Of course, these services come with a cost – different funds come with different fees that people should investigate before putting money into them, Bonaparte said.
The majority of people should spend more time studying than buying.
People could also invest in funds that are exposed to cryptocurrencies and blockchain technology, such as the exchange-traded internet fund Ark Next Generation. For example, the ETF is exposed to artificial intelligence, big data, cloud computing and blockchain.
Of course, some investors will still want to hold digital coins on their own. According to a survey of more than 30,000 people conducted by Piplsay Research in February, more than a quarter of Americans plan to invest in cryptocurrency this year. According to the report, half consider investing in cryptocurrency safe.
If you want to invest directly in Bitcoin or any other cryptocurrency, experts recommend learning as much as you can first and only investing an amount that you are happy to lose and hold for the long term.
“The majority of people should spend more time studying than buying,” Ross said, referring to cryptocurrency.
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