“Cautiously curious? There are ways to gain exposure to cryptocurrency without buying it” — Paul Ebeling
It hard to ignore some cryptocurrencies’ astounding performance: The price of 1 Bitcoin rose from just under $5,000 in March 2020 to over $60,000 this yr.
The excitement surrounding digital currency has some investors feeling left out, but too nervous to jump in.
For those investors who are cautiously curious, there are ways to gain exposure to cryptocurrency without buying it, and if you do decide to purchase, how to lower risk.
Some publicly traded companies have cryptocurrency holdings. And because they are betting on its success, you can too, with those companies acting as a buffer.
“When you’re thinking about investing in a company because they have exposure to crypto, it really runs the gamut from how direct or indirect you are in terms of that exposure,” says the President of Bone Fide Wealth in New York City. “It just depends on how much of their balance sheet is in crypto.”
Checking a company’s balance sheet can be revealing: As of 30 June 2021, Tesla (NASDAQ:TSLA) held $1.31-B in digital assets. And while the tech giant has received lots of media attention for its investment, that $1.31-B currently equates to only about 2.4% of Tesla’s total assets. But if those assets balloon in value, as cryptocurrency is sometimes do, Tesla’s stock value will too.
Another way to gain exposure is to invest in companies that have a stake in the cryptocurrency industry. Coinbase is a platform where investors can buy and sell cryptocurrency it is publicly traded.
Just like gold, you can either invest in the commodity itself or the infrastructure around it, the miners, the materials needed for mining. And there are public companies that are specifically operating in the blockchain space.
Riot Blockchain Inc. RIOT is 1 of those few publicly traded companies that focuses on cryptocurrency mining. Riot Blockchain, among others, helps build cryptocurrency infrastructure and provides another cryptocurrency-adjacent investment opportunity
So far, the US has approved one cryptocurrency exchange-traded fund, or ETF. This bitcoin ETF BITO launched by ProShares does not invest directly in bitcoin. Instead it it based on futures contracts tied to the cryptocurrency. Because it is an ETF, investors can likely invest directly from their brokerage accounts instead of having to open a crypto wallet.
When you decide to invest directly in cryptocurrency there are a few ways you can mitigate your risk. Some credit cards offer cryptocurrency rewards in a similar way as cash back or miles. If you decide to add cryptocurrency to your portfolio by way of rewards, you do not even have to use your own dollars to do so.
Have a prosperous, happy Thanksgiving holiday week, Keep the Faith!