Are Indirect Investments A Safer Option When Going Crypto?
If there is anything that we have learned in the past few months is that no form of crypto, including Bitcoin, has 100% stability. That's after a single tweet from tech and Tesla CEO Elon Musk wiped out 16% of Bitcoin's price value, which has since had people being worry about investing in Bitcoin and crypto overall. But our Philadelphia-based principal financial advisor on Wealth, S. Bhargav, has shared compelling insights into how to ensure financial safety with crypto going forward.
We should probably be afraid that the hit taken by Bitcoin earlier in the year, isn’t guaranteed to be the last one, but luckily, there are other investment options to stake on cryptocurrencies for the future that can lag investors from the seemingly random price slumps.
Whether you are interested in cryptocurrencies or you already own Bitcoin and you are revaluating how to invest in the future with minimal risk, there are multiple ways Bhargav has enlisted herein that you can use to indirectly expose yourself to the growing popularity of cryptocurrencies, notwithstanding the price dips.
The Securities and Exchange Commission (SEC) approved a cryptocurrency stock exchange-traded fund (ETF) earlier in the year. According to a SEC prospectus filed earlier this month, the entities the ETF will track are called “Bitcoin Industry Revolution Companies.” These companies are either holding a majority of their net assets in bitcoins like MicroStrategy or make most of their profits from cryptocurrency mining or manufacturing mining machines like Marathon Digital Holdings.
What Does That Mean for The Average Investor?
The rise of Bitcoin in the financial ecosystem has seen companies go public with calls for regulations to be put in place for Bitcoin to be offered in the mainstream brokerage accounts. This means that as an average investor, you would prefer to get indirect exposure to Bitcoin via company shares. But how else can you invest in Bitcoin without necessarily buying it? Let’s get the insight:
Buy Stock in Bitcoin-Related Companies
Most companies that have bought Bitcoins make financial decisions with regards to bitcoin. This means that the average investor can go indirectly and buy shares from such companies as a way of third-party exposure to bitcoins. Bhargav says it is a great start for those aspiring to invest long term in crypto because such companies charge traders with exchange valuations determined in close correlations with fluctuations in bitcoin price value. The latest companies to do direct listings are MicroStrategy and Coinbase Global Inc.
Invest in The Bitcoin Encryption Technology
As a digital currency, Bitcoin takes tremendous work going into encryption before it is stored in Blockchain. This creates an opening for bitcoin mining companies to develop digital currency units. And owning a stake in such companies helps investors get indirect access to bitcoin.
Invest in Altcoins
Altcoins, as in alternative coins, are secondary digital currency creations that have come up in the wake of the creation of the bitcoin. An example is Litecoin (2011), which research indicates has outperformed the bitcoin 178% to 86% this year. The second Altcoin is Ethereum, which has risen 400% in the same period.
(Written and edited by: The Decision Maker - Finance editors)