If you’re like most people, you have heard the term ‘’cryptocurrency’’ thrown around a lot lately, but have no idea what it actually is or how to invest in crypto. Cryptocurrencies are virtual or digital assets that use cryptography to secure their transactions and control the creation of new units.
In recent months, global interest in digital assets has exploded. While some investors have decided to purchase instruments such as Bitcoin and Ethereum, others seek alternative ways to invest in this exciting new asset class.
We will introduce you to this industry and provide you with tips on how to invest in crypto without buying it. So let’s learn how you can reap the benefits of crypto investments without actually buying any.
What is Indirect Crypto Investing?
There are a few ways to get exposure to cryptocurrencies without buying them yourself. You can invest in traditional methods like stocks, mutual funds, and ETFs that have indirect exposure to crypto. Alternatively, you could also look into derivatives or futures contracts that give you ownership of the underlying asset without having to hold it yourself.
When buying cryptocurrency, you should consider security, fees, and the risk of losses. Additionally, when purchasing crypto through a third-party intermediary, be aware that said party will likely make money off of the transaction in some way.
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Below are some perfect ways to invest in crypto without purchasing it.
1. Bitcoin Futures ETFs
For investors who are seeking an easy way to buy crypto, an ETF that owns bitcoin seems like a viable option. However, the Securities and Exchange Commission doesn’t readily permit an exchange-traded fund that owns bitcoin, much to the chagrin of the fund industry. So far, several firms are struggling to complete their ETF litigation while only a few of them have successfully launched Bitcoin ETF.
While the widespread adoption of Bitcoin has tempted many to make an investment in cryptocurrency, others are concerned about hacking or losing passwords or private keys needed to access their investments. Well, bitcoin ETFs are something you can consider to minimize the risk and still get good returns.
In addition, it’s not feasible for everyone to buy Bitcoin via a crypto exchange, and in such cases owning shares of a Bitcoin ETF isn’t a terrible option. All you have to do is open a brokerage account for purchasing Bitcoin ETF. It is similar to buying any other stock or ETF. However, in contrast to traditional stocks, ETFs charge an annual expense ratio which will be deducted from the investor’s account.
As bitcoin and other cryptocurrency is relatively new and fall under a highly volatile asset class, it is advised to consult a financial advisor or do your own research before making any investment decision.
2. Crypto Industry Stocks and ETFs
As blockchain technology continues to grow in popularity, an increasing number of crypto-focused ETFs are being created. These funds target companies that are working on new applications for the technology, as well as those involved in bitcoin mining.
However, investors should be aware that these stocks come with risks and that profitability is not guaranteed given the current price of bitcoin. Safe broker BDSwiss is one of the options you can use to trade cryptocurrency with.
3. Blockchain ETFs
Blockchain ETFs are thematic exchange-traded funds that own the stocks of companies working on blockchain technology and related innovations. When you buy a blockchain ETF, you would be exposed to a wider variety of assets than bitcoin ETFs or crypto ETFs, which primarily focus on tracking the price of individual cryptocurrencies.
People who believe in blockchain technology but are skeptical about cryptocurrency may find this to be a sound investment option. Through blockchain ETFs, investors can diversify their portfolio with a wide range of applications that go well beyond crypto
For instance, tech companies like microchip maker NVIDIA Corp, and software companies like VMWare have blockchain-focused businesses. In addition, there are also financial services firms like Galaxy Digital Holdings which manages crypto assets that derive their value from the blockchain. Global banks like HSBC and BNP Paribas finance blockchain initiatives are also focusing on blockchain applications.
With hundreds of different companies listing ETFs, blockchain has become a core part of the future of technology and businesses. Thus, choosing a blockchain ETF for your portfolio could be the best possible choice for investing.
4. Crypto Separately Managed Accounts (SMAs)
Sophisticated investors willing to make some decisions, but still looking for help from a professional, may want to consider a separately managed account (SMA). SMAs are like mutual funds that are typically managed by a professional money manager who makes investment decisions and trades for you.
However, unlike with mutual funds, you can offer direction to the manager regarding what investments you do or don’t like. You also own the coins yourself (as opposed to owning shares of a fund).
5. Grayscale and Osprey over-the-counter trusts
Bitcoin investment trusts are another way to get exposure to the cryptocurrency market without having to buy, store and protect coins or tokens yourself.
These trusts trade throughout the day, making it possible to bet on crypto without all of the hassles. But keep in mind that you may pay a higher fee for this type of fund than you would for an ETF. For instance, Grayscale Bitcoin Trust charges a 2% expense ratio, which is double what some popular futures ETFs charge.
As you see there are enough options to invest in crypto without actually buying the digital asset. Use the options and strategies we’ve described and start investing in crypto today. You can invest in crypto or stocks – the main thing is a little research and some knowledge of the market, and you could see great returns on your investments.