They are the hot topic in finance, promising extraordinary returns and a view into the future of digital finance. However, the idea of buying and holding on to them seems very daunting, at best, given their volatility, complexity, and security concerns. On the bright side, one doesn’t have to buy them directly to get exposure into the crypto world. The blog will present several ways to indirectly invest in the crypto ecosystem, thus helping an investor leverage the growth of this sector while avoiding pitfalls associated with holding digital coins.
Invest in Stocks Related to Cryptocurrencies
Exposing oneself to the cryptocurrency market does not get any easier than investing in shares of companies operating in the cryptocurrency space. They may be involved in cryptocurrency mining, development of blockchain technology, or running a crypto exchange.
Crypto Mining Companies: Companies like Riot Blockchain and Marathon Digital Holdings are deep into mining Bitcoins. When investing in their stocks, one gets indirect exposure to the price swings in Bitcoin because their financials are closely related to the cryptocurrency’s value.
Blockchain Technology Firms: Companies such as IBM and Oracle are building blockchain technology. Therefore, their deal in developing blockchain solutions can indirectly offer exposure to the larger crypto ecosystem.
Exchanges: Publicly traded exchanges, such as Coinbase and Bakkt, benefit from trading fees and, more broadly, market activity. By investing in such stocks, one can tap into the growth of cryptocurrency trading better without having to personally hold any crypto.
Block ETFs
ETFs are a convenient way to get exposure to a diversified portfolio in the market. Blockchain ETFs Invest in companies that deal with Blockchain technology and the cryptocurrency market.
Amplify Transformational Data Sharing ETF (BLOK): This is an ETF investing in companies at the forefront of the Blockchain Revolution, spanning sectors: crypto mining, software development, and financial services.
Siren Nasdaq NexGen Economy ETF: This ETF focuses on companies actively developing and implementing blockchain technology.
ETFs bring together benefits like diversification, professional management, and liquidity, all in one vehicle, through which an investor can participate in blockchain and crypto markets.
Invest in Companies Integrating or Accepting Crypto
Companies integrating or accepting any form of crypto are an indirect way one can benefit from the growth of the crypto market.
Tesla— TSLA: The huge announcement by Tesla regarding the acceptance of Bitcoin as payment for its electric vehicles moved the markets. The news received mixed reviews, and subsequent reports indicated that this has since been rescinded. Its investment in Bitcoin could move the needle on the company’s stock.
PayPal— PYPL: This leading fintech company enables the buying, selling, and holding of cryptocurrencies and has plans for further expansion of crypto services. This involvement can move the needle up for PayPal stock as crypto adoption accelerates.
Square SQ: Square, through its Cash App, facilitates transactions in Bitcoin and has invested heavily in Bitcoin. Their crypto activities add to the company’s financial performance.
Invest in Crypto Mutual Funds
Crypto mutual funds offer an avenue to invest in a fund that holds a diversified portfolio of crypts or blockchain-related assets.
Bitwise 10 Crypto Index Fund: This fund follows the 10 largest cryptocurrencies by market capitalization. It has some direct exposure, but it’s professionally managed, thereby diminishing the risk of individual results.
Grayscale Bitcoin Trust (GBTC): Though technically a trust, GBTC is almost the same thing as a mutual fund. It gives you exposure to Bitcoin without having to deal with the cryptocurrency itself.
These funds provide professional management and diversification, thereby making the crypto assets more approachable for investment.
Invest in Stablecoins
Stablecoins are digital currencies with the target of stable value usually pegged to traditional assets such as the US dollar. If you want to take the path with lower risks involved, then invest in stablecoins.
Tether USDT: This is the most famous stablecoin, created by Tether and pegged to the US dollar, which makes it less volatile than other forms of cryptocurrency.
USD Coin USDC: It is another popular stablecoin known for its transparency and stability. It is also pegged to the US dollar.
Dai DAI: As a decentralized stablecoin backed by a basket of different cryptocurrencies, Dai is able to maintain a close peg to the US dollar.
Stablecoins can be used to earn interest on crypto platforms or be converted into fiat, thus offering a stable investment avenue.
Lend on Crypto Lending Platforms
Crypto lending platforms give you the ability to either lend to a pool of borrowers and earn interest on your cryptocurrency holdings or individually to particular borrowers.
BlockFi: Interest-bearing accounts in Bitcoin, Ethereum, and stablecoins.
Celsius Network: High-interest rates on various cryptocurrencies and stablecoins.
Nexo: Paying interest to crypto holders in various assets at one’s fingertips.
Investments in such platforms can help you generate a source of passive income without exposing you directly to trade your cryptocurrencies.
Conclusion
This, however, does not necessarily mean that while investing in the crypto space, you have to buy and then hold on to any cryptocurrency. By exploring the indirect investment opportunities that involve stocks in crypto-related businesses, ETFs, blockchain companies using cryptos, mutual funds, stablecoins, and lending platforms, you will open your doors to the exciting world of digital finance while you tred carefully around the risks and complexities. You would have different methods having different advantages and considerations. Your investment choices, therefore, must be aligned in accordance with your financial goals and risk tolerance.