5 Tips How to Invest in Crypto without Buying Crypto
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 it. 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 instead of thinking is crypto safe to invest in, let’s begin exploring things.
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 for investing in crypto without purchasing it.
Bitcoin futures ETFs
The Securities and Exchange Commission has so far declined to permit an exchange-traded fund that owns bitcoin, much to the chagrin of the fund industry.
Bitcoin’s price is currently being tracked by a number of ETFs.
These ETFs hold futures contracts, which allows investors to bet on future price movements. Bitcoin is not the only commodity or currency that this type of investment vehicle tracks – oil prices are also followed in this way. If your account offers fractional shares, you may be able to get started with just a few dollars.
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.
Exchange-traded funds (ETFs) are a type of investment that operates like a hybrid between mutual funds and stocks. When you buy an ETF, you have a stake in the basket of investments owned by the fund. While many ETFs are low-cost, some can be more expensive.
If you’re interested in investing in cryptocurrency, consider buying an ETF focused on blockchain technology. People who believe in blockchain technology but are skeptical about cryptocurrency may find this to be a sound investment option.
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 in that they are portfolios created for a single investor and typically managed by your financial advisor.
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).
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 for investing 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.