You’ve heard about cryptocurrencies like Bitcoin, Ethereum, and Litecoin. Now you’re wondering how to invest in these virtual currencies. Here’s the thing: you don’t need to buy cryptocurrency directly in order to make an investment.
In fact, there are a lot of indirect ways to invest in crypto that allow you to avoid taking any direct exposure at all.
What Is Indirect Crypto Investing?
Some investors find it challenging to invest in crypto because of its erratic price movements, including the Brise price. That’s why they look for other ways to invest in crypto without directly investing in it.
Indirect crypto investing is the act of investing in companies that deal with cryptocurrency such as Bitcoin. The most obvious example would be investing in a company that deals with Bitcoin cloud mining or blockchain technology.
Indirect crypto investing is a term that refers to putting money into an investment vehicle without buying digital currency directly. The main difference between this and direct investing is that with an indirect investment, the investor does not hold the underlying asset. There are two types of indirect crypto investments: non-leveraged and leveraged.
Non-leveraged indirect crypto investing involves moving money into a fund or some other financial product that invests in crypto.
Leveraged indirect crypto investing involves borrowing money to make an investment.
5 Ways to Buy Crypto Without Buying Crypto
Crypto ETFs and Mutual Funds
An ETF is an investment fund that owns assets, such as stocks or bonds. An ETF that owns crypto can be bought through your broker and held in your brokerage account like any other stock or ETF.
You can also invest in crypto through certain exchange-traded funds (ETFs) and even mutual funds that are already on the market.
These investment vehicles will give you indirect exposure to the crypto market, with some of them even offering direct exposure if you’re willing to pay a premium. They’re also much less risky than buying crypto directly, since they aren’t exposed to the same volatility risks so long as you don’t try to actually withdraw your money from them.
Grayscale and Osprey over-the-counter trusts
Two over-the-counter trusts that are worth considering are Grayscale and Osprey. These are not traded on an exchange, so they’re not as liquid as listed stocks. They also lack the transparency of their publicly traded counterparts and aren’t regulated by the SEC like other investment vehicles (though they do have their own internal rules).
Because of these factors, it’s important to do your research before investing in them — but if you do your homework and understand the risks involved with this type of product, it could be worth your while.
Crypto separately managed accounts (SMAs)
A crypto separately managed account (SMA) is a financial product that allows you to invest in cryptocurrency without actually buying it. An SMA will hold the coins for you, but they’re not like traditional investment funds because they don’t charge a fee for doing so. Instead, they charge a percentage of your portfolio’s performance every year.
How do SMAs work? You give them money and tell them how much risk you want to take on — whether that means investing in all major cryptocurrencies or just Bitcoin and Ethereum. Then, the manager buys and sells coins based on their analysis of current trends and news events within the industry.
Your 401(k)
One of the most well-known methods of getting crypto is through a 401K. It’s simple: just take the money out of your 401k before taxes are applied and use it to buy crypto. Since 401Ks are retirement funds, it’s not going to be taxed until you’re ready to retire – which is why this method works so well.
This is also advantageous because the money isn’t coming from an immediate source – meaning that if you use your 401K now, it could be years before the government realizes that you took money out of your retirement fund in order to buy a bunch of digital nonsense.
Crypto industry stocks and ETFs
Investing in crypto industry stocks is a way to invest in cryptocurrency without buying the actual digital asset. These companies are related to the blockchain or cryptocurrency industry, and their shares can be bought on stock exchanges.
Crypto industry stocks are usually more expensive than buying Bitcoin directly because you’re investing in a company that has nothing to do with cryptocurrencies, but it does have some exposure to them (for example, if you buy shares of Nvidia because they make GPUs for mining). So you’ll pay more than if you were just buying Bitcoin directly from an exchange like KuCoin, Coinbase, or Kraken.
Stocks to invest in crypto without buying crypto directly
ProShares Bitcoin Strategy ETF (BITO)
If you’re looking for an actively managed fund, ProShares’ Bitcoin Strategy ETF is for you. This fund is a leveraged short fund that uses derivatives to move its returns up or down based on the performance of bitcoin. It’s also worth noting that BITO is not an ETF at all — it’s more of a hybrid between an ETF and a mutual fund. So if you want to invest in this product because it has “Bitcoin” in its name, keep in mind that it doesn’t hold any bitcoins itself.
MicroStrategy (MSTR)
MicroStrategy (MSTR) is a software company that provides business intelligence software. The company’s software helps businesses manage and analyze their data, which can be used to make strategic decisions.
MicroStrategy went public in 2013, and since then it has outperformed the market by more than 4x. It also pays a dividend of $0.12 per share every quarter, providing investors with some extra income on top of capital gains if they hold onto their shares for long enough.
Coinbase Global (COIN)
Coinbase is one of the most popular crypto exchanges, and it’s on the NYSE. Coinbase Global is a subsidiary of Coinbase that allows you to trade cryptocurrencies without buying them directly. If you want to get into trading but don’t want to deal with all of the technical details, this is a great option for you.
Coinbase Global offers several different types of accounts: Individual Accounts, Institutional Accounts, and Prime Accounts. There are no fees associated with opening an account or depositing funds into it. However, there may be withdrawal fees depending on what kind of currency you’re withdrawing from your account.
Robinhood Markets (HOOD)
Robinhood Markets (HOOD) is a stock brokerage app that allows you to buy and sell stocks and ETFs without paying any commission. It’s been around since 2013, has over 6 million users, and is growing rapidly.
The company recently announced that it was launching a crypto trading platform called Robinhood Crypto in February 2018. This means you can invest in cryptocurrencies like Bitcoin, Ethereum, Litecoin, and others through your existing brokerage account at no additional cost.
Paypal (PYPL)
Although not as popular as other methods, this is one way that you can purchase crypto without paying any fees and without having to wait too long for the transaction to go through. When using this method, someone has already successfully verified their identity on Coinbase and purchased some bitcoin with their PayPal account. Once they’ve done that, they can send their bitcoin over to another exchange and sell it for the cryptocurrency of their choice.
Block Inc. (SQ)
Block Inc. (SQ) is a global leader in blockchain technology. The company offers a wide range of solutions for developers, enterprises, and institutions to build on top of its platform. Block Inc.’s business model is based on providing software development kits (SDKs), which allow developers to build applications on the blockchain without having any knowledge about cryptocurrencies or how they work.
Tesla (TSLA)
Tesla is a leader in electric vehicles and has a large market cap. As such, it makes for a good investment even if you don’t own a Tesla car. The stock price has declined in recent months, but that doesn’t mean it won’t go up again. In fact, if you buy now and hold onto your shares until 2022 — when Musk expects to begin producing self-driving cars — you could see your investment grow by over 500%.
Bitfarms Ltd. (BITF)
Bitfarms Ltd. was founded in 2014 and is headquartered in Montreal, Canada. The company is a technology company based in the cryptocurrency market that allows investors to make Bitcoin transactions without having to own any of the digital currencies themselves. Bitfarms can be purchased on the TSX Venture Exchange under the symbol BITF.
Silvergate Capital Corporation (SI)
Silvergate Capital Corporation (SI) is a holding company that has a majority interest in Silvergate Bank. The company was founded in 2013. SI is headquartered in San Francisco, California, and has more than 20 branches. The primary business of SI is to provide financing for real estate and commercial projects as well as home mortgages.
Marathon Digital Holdings, Inc. (MARA)
Marathon Digital Holdings, Inc. (MARA) is a company that aims to remove those barriers for the average investor. MARA is the owner of the Cryptocurrency Digital Index (CDXC), which provides exposure to top crypto assets without requiring investors to hold them directly.
The CDXC uses an index construction methodology that captures the returns of the underlying cryptocurrencies by owning cash equivalents and derivatives, such as futures, swaps, options, and forward contracts. This ensures that investors get both cryptocurrency-like returns and downside protection from these instruments.
