How to Invest in Crypto without Buying Crypto

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How to Invest in Crypto without Buying Crypto

If you want to acquire cryptocurrency, you may do it with Bitcoin, Ethereum, and other altcoins. However, there are other methods to explore the crypto realm. Here’s a deeper look at what you need know if you want to invest in cryptocurrency without purchasing it.

Key Takeways

  • Cryptocurrency is a novel investment with distinct dangers.
  • Due to the volatility of cryptocurrencies, investing directly in them may be difficult, and some investors choose to invest via more conventional investment vehicles.
  • You may invest in cryptocurrencies indirectly via numerous funds and cryptocurrency-related stocks.

What Is Indirect Crypto Investing?

You’re not out of options if you don’t want to register an account on a cryptocurrency exchange and purchase cryptocurrencies. You may invest in bitcoin indirectly, gaining exposure to it without purchasing it directly. Traditional types of indirect investing include equities, mutual funds, and exchange-traded funds (ETFs).

Again, there are advantages and disadvantages to consider, including as security, costs, and the danger of loss. When you acquire cryptocurrencies via a third party, that third party will gain money in some way, so keep that in mind when determining whether to buy bitcoin through an indirect investment.

Crypto ETFs and Mutual Funds

The first approach to purchase cryptocurrency without directly purchasing it is via investment funds. Grayscale Bitcoin Trust is one of the early significant entries into this product (GBTC).While it functions similarly to an ETF, it is a wholly separate legal entity. Investing in GBTC via your brokerage account, on the other hand, achieves the same outcome as purchasing a Bitcoin fund. The investment price will fluctuate in tandem with the market price of Bitcoin.

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Grayscale’s main disadvantage is its 2% expense ratio. They merely charge 2% for purchasing Bitcoin and storing it in your name in a wallet. You can do it yourself quite simply without incurring a 2% monthly charge.

ProShares Bitcoin Strategy ETF (BITO), Valkyrie Bitcoin Strategy ETF (BTF), VanEck Bitcoin Strategy ETF (XBTF), Global X Blockchain & Bitcoin Strategy ETF (BITS), and the Bitwise 10 Crypto Index Fund are among the other funds (BITW).Fees and underlying investments vary depending on the fund, so read the prospectus carefully and understand what you’re receiving.

Cryptocurrency and Blockchain Stocks

If you want to invest in a company that exposes you to cryptocurrency, you may select between firms that operate in the blockchain sector and those that invest in or hold bitcoin on their balance sheets.

Companies in the cryptocurrency business are engaged in bitcoin mining, software development, and other services. Riot Blockchain (RIOT), Canaan (CAN), HIVE Blockchain Technologies (HIVE), and Bitfarms are all stocks to consider (BITF).Coinbase (COIN) is one of the most popular and well-known cryptocurrency exchanges and stocks.

In general, when cryptocurrency values fall, many cryptocurrency stocks suffer. Keep those risks in mind while purchasing, and consult with a reputable financial advisor if you have any questions about your investing choice or goals.

Bonus Tip: Credit Card Rewards

Credit card rewards are another way to add to your bitcoin holdings without opening your money wallet. Several cards enable you to earn cryptocurrency anytime you swipe, touch, dip, click, or do anything else to pay with a credit card.

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The BlockFi Rewards Visa Signature card, Gemini Credit Card, and Upgrade Bitcoin Rewards Visa card are notable personal cryptocurrency credit cards. The Crypto.com exchange and Coinbase both provide a rewards card option.

Some cards, such as the SoFi personal credit card and the Venmo credit card, have various redemption alternatives, including bitcoin. When you earn cryptocurrency as a credit card reward, you invest in cryptocurrency without purchasing it. Even if the value falls, you did not pay for the cryptocurrency, therefore anything you walk away with is profit.

The Bottom Line

Cryptocurrencies are sometimes heralded as a game-changing technology. Investing indirectly in cryptocurrency is a fantastic alternative for individuals who want to be a part of the new technology, but it should be done with prudence. As a consequence, the portfolio will be more diversified, and the risk will be more equally dispersed.

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