How To Invest In Bitcoin Without Buying Bitcoin

By | November 8, 2021

Bitcoin, the world’s largest cryptocurrency, is appearing everywhere these days. From fast food to sports and even local Walmart, it finds a place in the normal environment. As an investor, its amazing rally this year has delighted its fans while raising the curiosity of beginners. In 2021 alone, the value of Bitcoin has more than doubled. Time to invest yourself?
The easiest way to bet on Bitcoin, of course, is to buy it. But there are many reasons why you may not want to take such a direct route. Maybe you know nothing about Bitcoin and want to get involved but prefer to get acquainted with traditional types of investments. Or maybe you know a lot about Bitcoin and don’t want to touch it, beware of seemingly ridiculous price fluctuations. Or you already own Bitcoin, and are looking to invest more in the future of cryptocurrencies. The good news is, there are more ways than ever for US investors to be exposed.

Here is a summary of some of the alternatives:

ETFs

Although trading currencies tracking the price of Bitcoin have been around for a while in countries such as Canada and Europe, it has been a different story in the U.S., where they have long been banned by regulators. That all changed in October, when the first Bitcoin-related ETFs were allowed to start.

More importantly, these products are investing in the future of Bitcoin, which tracks the local price of Bitcoin indirectly through contracts regulated by the Chicago Mercantile Exchange. (The Securities and Exchange Commission argues that this version has more protection for investors than the usual Bitcoin ETF.) Two have been launched so far: (BITO) and (BTF).

Each charges $ 9.50 for every $ 1,000 you invest, and involves a complex future world, which is the tools that traders use to bet price movements. But these funds may be suitable for those new to the world of Bitcoin or those hoping to pool their money into a traditional brokerage account that does not allow for real cryptocurrency.

Some manufacturers such as Direxion Investments and Valkyrie Investments have sought to introduce future Bitcoin currencies with assistance, allowing investors to make higher bets that the price of Bitcoin will go up or down. Both have filed their applications with the SEC this week, almost following signs from U.S. regulators that they are less likely to be approved, according to Bloomberg Intelligence. But it is something to look forward to in the future.

The ETF industry is also hoping to see a wallet holding Bitcoin – more than a dozen issuers are interested in launching the products – but doubts from the SEC mean this is a way out.

Purchasing Traditional Shares at a Bitcoin Related Company

Companies have structures that may be very familiar to the average investor, such as senior decision-making bodies and financial results that need to be disclosed. This is one of the reasons why some choose this method in order to get indirect exposure to Bitcoin.

“It would be easy for people to get into industries that already understand and use this technology to make it work better,” said Sweta Bhargav, chief financial advisor at Adviso Wealth in Philadelphia. “It would be a better place to start for investors.”

Coinbase Global Inc. is a good example. Because most of the revenue comes from payments that charge users to deposit and trade in currencies, the value of the crypto exchange fluctuates in line with the Bitcoin value. In a statement to the SEC, the company stated: “Our net income depends largely on the prices of crypto assets and the volume of transactions made on our platform.”

Alternatively, investors can focus on companies that are more efficient at Bitcoin and have more assets. Tesla Inc. has an estimated $ 1.26 billion in “digital assets” according to its latest financial statements.

Other mass-owned public companies include MicroStrategy Inc., a business software company with 114,042 units of Bitcoin by the end of September; and Galaxy Digital Holdings Ltd., with hundreds of millions.

For companies that do things without holding Bitcoin, you should also check their industry and performance for each product. Stock performance will be influenced by a range of factors that each company has to deal with, not just the price of Bitcoin.

“The risk recovery profile is not exactly the same, as you are also taking a position on the companies themselves and as a result experiencing their unique risks,” said Michael Kelly of Switchback Financial in Madison, Connecticut.

For the year so far, Tesla has increased by 73%, while MicroStrategy has gained 105% and Galaxy Digital has increased more than 200%.

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