How to invest in Bitcoin and crypto — without actually buying it
Bitcoin has surged to a new high of $94,000, bringing the long-anticipated milestone of $100,000 tantalizingly within reach. This significant price jump, following Trump’s election victory, has reignited enthusiasm among investors who had previously been hesitant to enter the cryptocurrency market. A key factor behind this reluctance is the lack of understanding about how to invest in Bitcoin and the perceived risks associated with it.
For those apprehensive about directly owning or holding Bitcoin, it’s worth noting that there are alternative ways to gain exposure to this dynamic asset class without the complexities of direct ownership. Here are some approaches to consider:
ETFs (Exchange-traded funds)
Exchange-traded funds (ETFs) offer an excellent way to gain exposure to Bitcoin, Ether, and other cryptocurrencies without the need to directly purchase or hold these digital assets. ETFs are essentially collections of investment products, such as stocks, bonds, or other securities, bundled together into a single fund. This allows investors to spread their risk across multiple assets rather than focusing on just one. Additionally, ETFs are traded on major stock exchanges, just like individual stocks, making them highly accessible and easy to buy or sell during market hours.
Investors looking to participate in the cryptocurrency market without directly handling digital wallets or navigating the complexities of crypto exchanges can look for Bitcoin ETFs and Ether ETFs that have gained popularity this year. Moreover, Solana ETFs and XRP ETFs are on the way, seeking approval from the Securities and Exchange Commission.
Some experts believe that investing in Bitcoin ETFs is better than gold ETFs because over the past 30 years, more than 5,000 exchange-traded funds (ETFs) have been launched across various sectors, but Bitcoin ETFs have outpaced them all, including the highly successful gold ETFs.
Options trading
Options trading involves speculating on the value of an asset by purchasing or selling options contracts. An option is a type of financial contract that grants the buyer the right, but not the obligation, to buy (call option) or sell (put option) an asset at a predetermined price (the strike price) by a specific date (the expiration date). To acquire this right, the buyer pays the seller a premium.
In October, the Securities and Exchange Commission (SEC) granted approval for the NYSE American LLC and CBOE to list options on spot Bitcoin exchange-traded funds (ETFs), marking a significant development in cryptocurrency history. This approval paves the way for institutional investors, or “big fish,” to gain greater access to Bitcoin through more traditional financial products.
Earlier this week, a few Bitcoin ETFs options began trading on the Nasdaq (NDAQ), introducing a new way of investing in Bitcoin without actually owning it.
Crypto stocks
Another way to gain exposure to Bitcoin without directly owning it is by investing in the stocks of companies actively involved in cryptocurrency-related services or that hold significant Bitcoin reserves. Several publicly traded firms offer indirect access to the crypto market through their operations or investments in digital assets.
For example, MicroStrategy (MSTR), a business intelligence firm, is well-known for its substantial Bitcoin holdings and advocacy for cryptocurrency adoption. Tesla (TSLA), led by Elon Musk, has also invested heavily in Bitcoin, influencing both the crypto and traditional financial markets. Coinbase (COIN), a leading cryptocurrency exchange, provides services for buying, selling, and managing digital assets, making it a popular choice among crypto investors. Marathon Digital Holdings (MARA), a prominent crypto mining firm, generates revenue by mining Bitcoin.
These companies, among others, provide a way to benefit from Bitcoin’s potential growth by trading their stocks on traditional trading platforms. This approach not only eliminates the need for direct ownership of Bitcoin but also allows investors to diversify their portfolios within the broader cryptocurrency ecosystem.
