Alternative Crypto Investment Vehicles

With extensive experience as an electrical/software/coding engineer along with having a diverse financial background, Thomas Wettermann’s areas of interest 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, Web 3.0, and metaverse ecosystems.

Investing in cryptocurrencies can be complex and challenging. Cryptocurrencies must be purchased through crypto exchanges and they must be held or stored in either cold or hot storage.

As such, retail investors interested in seeking crypto investment exposure often will choose alternative investment vehicles that do not require the purchase or custody of cryptocurrencies.

There are several such alternative investment vehicles.

Index Funds

Investors seeking to incorporate crypto into their portfolios can also purchase index funds.

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 companies that already have a certain degree of crypto exposure, including Visa, Microsoft, NVidia, Mastercard, PayPal, Tesla, Advanced Micro Devices, Goldman Sachs, and IBM.

Mutual Funds

Retail investors can also purchase sector mutual funds that focus on crypto or blockchain technologies.

A crypto-related mutual fund that retail investors should consider includes Bitwise Ten Crypto Index Fund (BITW).

BITW follows the performance of the Bitwise 10 Large Cap Crypto Index, representing the ten most highly valued cryptocurrencies. And the Bitcoin Strategy ProFund (BTCFX) invests in Bitcoin futures contracts.

Trusts

Grayscale is an asset management company that manages investment trusts, including the Grayscale Bitcoin Trust (GBTC) and Grayscale Ethereum Trust (ETHE). These trusts are structured to buy, hold, and protect cryptocurrencies so that the investor does not have to custody any digital assets.

The Grayscale Bitcoin Trust owns the Bitcoin coins and sells shares to retail investors that are supposed to track the price of Bitcoin. These trusts are traded 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: This is the largest blockchain ETF by total assets. This fund 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: This fund tracks the performance of the NASDAQ Blockchain Economy Index, comprising stocks that support blockchain technology. 

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

Conclusion

Investors seeking crypto investment exposure without its related purchasing and custody challenges have a number of options. These options reduce some of the challenges of holding or maintaining custody of these digital assets. However, before deciding to invest, purchase, and/or trade cryptocurrency, investors should carefully consider their investment objectives, level of experience, adversity to risk, and volatilities. Therefore, with any type of crypto investment, it is always best to investigate before investing. 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 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; 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 a 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 the 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.