HOW TO BECOME A CRYPTO INVESTOR WITHOUT PURCHASING CRYPTOCURRENCIES

With extensive experience as an electrical/software/coding engineer along with having a diverse financial background, Thomas Wettermann’s areas of interests include Machine Learning (ML), artificial intelligence (AI), and Financial Technology (FinTech). For the past few years, Thomas Wettermann has focused on the underlying technologies that support and promote all phases of cryptocurrency ecosystems. 

Investing in cryptocurrencies can be cryptic, complicated, and volatile. In addition, cryptocurrencies must be purchased through crypto exchanges and must be stored in either cold or hot storage. As such, retail investors interested in seeking crypto investment exposure often seek alternative investment vehicles that do not require investors to purchase or hold crypto directly. There are a number of such alternative investment vehicles. 

Companies That Own Cryptocurrencies

One way to invest in crypto without having to purchase currencies is to invest in companies that hold cryptocurrencies on their balance sheets. The thought being that as the value of the crypto enhanced balance sheet goes up, the company stock price will naturally follow. Publicly traded companies that currently own cryptocurrencies on their balance sheets include: 

- MicroStrategy (NASDAQ: MSTR) $7B USD 

- Tesla Inca (NSADAQ: TSLA) $1.5B USD 

- Square (NYSE:SQ) $259M USD 

- Marathon Digital Holdings (NASDAQ: MARA) $175.3M USD

Companies Active in Cryptocurrencies or Blockchain Technologies 

Another option is investing in companies that develop blockchain technologies or that are involved in cryptocurrency operations, such as mining. Exemplary companies include: 

- Bitfarms (NASDAQ: BITF) (operates blockchain computing centers); 

- Coinbase (NASDAQ: COIN) (public cryptocurrency exchange); 

 - Galaxy Digital Holdings Ltd (OTCPK: BRPHF) (crypto investment management, trading, custody, and mining); and 

 - Riot Blockbuster Inc. (NASDAQ: RIOT) (Bitcoin mining company). 

Index Funds

Rather than purchase individual corporate shares, investors seeking to incorporate crypto into their portfolio can purchase index funds. Most index funds - such as S&P 500 or total market funds - have inherent exposure to crypto related companies. For example, S&P 500 index funds include many crypto related companies, including: Tesla, Microsoft, NVidia, Visa, Mastercard, PayPal, Advanced Micro Devices, Goldman Sachs, and IBM. 

Mutual Funds

Retail investors can also purchase sector mutual funds that focus on crypto or blockchain technologies. Example mutual funds include Bitwise Ten Crypto Index Fund (BITW). This fund tracks the performance of the Bitwise 10 Large Cap Crypto Index, representing the ten most highly valued cryptocurrencies. And the Bitcoin Strategy ProFund (BTCFX) seeks capital appreciation by investing in Bitcoin futures contracts. 

Trusts

Grayscale, an asset management company, runs two investment trusts: Grayscale Bitcoin Trust (BTC) (GBTC) and Grayscale Ethereum Trust (ETHE). With these trusts, Grayscale buys, holds, and protects the cryptocurrencies so that the investor does not have to custody any coins. The Grayscale Bitcoin Trust owns the underlying assets (BTC) and sells shares to retail investors that are supposed to track the price of Bitcoin. Both trusts are publicly traded OTC (over-the-counter). 

Exchange Traded Funds (ETFs) 

ETFs track the performance of a certain industry or a sector and can be purchased on a stock exchange. Example ETFs include: 

 - Amplify Transformational Data Sharing ETF (BLOK): BLOK is the largest blockchain ETF by total assets, and invests primarily in equity securities of companies actively involved in the development and utilization of blockchain technologies, such as PayPal, MicroStrategy, and Square. 

- Siren NASDAQ NexGen Economy ETF (BLCN): BLCN tracks the performance of the NASDAQ Blockchain Economy Index, comprising stocks that support blockchain technology. 

 - First Trust Indxx Innovative Transaction and Processing ETFs (LEGR): LEGR’s largest holdings include NVIDIA, Oracle, and Fujitsu. 

Bitcoin ETFs

Recently, the Securities and Exchange Commission (SEC) approved a Bitcoin based-futures ETF. Bitcoin futures are financial contracts that obligate the buyer and seller to the contract to transact Bitcoin at a predetermined future date and at a predetermined price. The buyer must purchase, or the seller must sell the underlying Bitcoin at the set price, regardless of the current Bitcoin market price at the expiration date. For example, the ProShares ETF (BITO) offers investors the opportunity to gain exposure to returns of Bitcoin with the ease of buying an ETF in a brokerage account. 

Cryptocurrency Credit Cards

Another way to indirectly invest in crypto is to use a “crypto” bearing credit card. With these cards, purchaser’s can earn a small amount of crypto every time they use the card.  A few of the more popular cards: 

- BlockFi 

- SoFi Credit Card 

- Brex Card 

- Venmo Credit Card 

- Gemini Credit Card 

- Mastercard 

Conclusion

Investors seeking crypto investment exposure without its related purchasing and custody challenges have a number of different investment options. These options reduce some of the challenges but not the potential volatility of these coins. Therefore, with any type of investment, it is always best to investigate prior to investing in a crypto. As they say in crypto, DYOR. 

All the views expressed on this site are those of Thomas Wettermann and do not represent the opinions of any entity whatsoever with which Thomas Wettermann has been, is currently, or will be affiliated. Trading digital financial assets such as cryptocurrencies can carry a high level of risk, and may not be suitable for all investors. Before deciding to invest, purchase, and/or trade cryptocurrency you should carefully consider your investment objectives, level of experience, adversity to risk and volatilities. The possibility exists that you may sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with cryptocurrency trading, and seek advice from a qualified and independent financial advisor.

Thomas Wettermann is not an independent financial advisor. Any opinions, news, research, analyses, prices, or other information contained on this website is provided as general market commentary of Thomas Wettermann, and does not constitute investment advice.

Thomas Wettermann will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information. All opinions expressed on this site are owned by Thomas Wettermann and should never be considered as advice in any form.