Would you like to get to know Bitcoin without owning cryptocurrency yourself? Here are some investment ideas
Bitcoin’s roller coaster ride is back – and it doesn’t seem to be wearing off anytime soon.
Bitcoin rebounded on Monday, rising around 14% near the 38,000 level after falling to less than $ 32,000 on Sunday. The choppy move comes just days after Bitcoin fell 30% near the $ 30,000 mark on May 19. Bitcoin hit an all-time high near $ 65,000 in April.
“I think the volatility will continue,” said Mohamed El-Erian, Allianz economic advisor, in CNBC’s “Squawk Box” on Monday. “The roller coaster, the ups and downs.
“We were trading in the $ 30,000 to $ 44,000 range in a week,” he added. “That is enormous.”
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Although cryptocurrency has skyrocketed over the past decade and is widely supported by large banks, it can be a complicated investment for most retail investors. It’s historically expensive, volatile, can’t be bought through a traditional brokerage account, and isn’t backed by a financial institution.
There are a few ways people can invest in cryptocurrency, and even Bitcoin specifically, or the technology behind it, without actually holding actual coins. It may not completely protect investors from the volatility of the brands of cryptocurrency, but it can provide them with some protection from losses.
“There are things you can do for indirect exposure,” said Tyrone Ross, investment advisor and CEO of Onramp Invest, a digital investment platform. “If people do that, I think it’s better and safer before they actually start looking into the subject.” [bitcoin] Rabbit hole.”
Invest in companies that hold cryptocurrencies
One way to use Bitcoin without holding it is to invest in stocks of companies that offer cryptocurrency services or hold coins themselves, Ross said.
This includes a large group of publicly traded companies in various sectors that either have Bitcoin on their balance sheets or have cryptocurrency storage or payment services.
For example, Tesla bought $ 1.5 billion worth of Bitcoin in February and said it would soon be accepting the digital currency as a form of payment. Of course, CEO Elon Musk announced in May that the automaker had suspended vehicle purchases using the cryptocurrency due to environmental issues, increasing Bitcoin’s volatility.
Look at companies with related technology
Another way for investors to get exposure to cryptocurrency is to invest in publicly traded companies that have technology for trading coins or that use blockchain, the technology that Bitcoin is based on.
Experts also called out companies like Square and Paypal that allow users to trade cryptocurrency on their platforms. In addition, companies like Riot Blockchain and Galaxy Digital are focusing on the cryptocurrency and its underlying technology. Big technology names like Microsoft, IBM, Google, SAP and Amazon use blockchain in different areas of their business.
There is also underlying hardware that people could invest in to be exposed to crypto without holding coins.
“Someone could also get involved in companies that make graphics processing units (GPUs) needed to enable computers to solve the math equations for blockchain technology,” said Anjali Jariwala, certified financial planner, CPA and founder of FIT Advisors in Torrance, California.
Investing in company stocks is much easier and likely safer than investing in a cryptocurrency. For one, this can be done through a regular brokerage account maintained by a financial institution, which gives the user additional security and ease of use. For example, if you’ve forgotten the password for a brokerage account, you can reset it. This does not apply if you forgot the key to your Bitcoin wallet.
Still, it cannot eliminate volatility, Jariwala said.
Check out a cryptocurrency fund
According to Doug Boneparth, CFP and President of Bone Fide Wealth in New York, it is also possible to invest in funds that hold Bitcoin and other cryptocurrencies.
Right now there are some players creating bitcoin trusts, he said, referring to companies like Grayscale and Osprey that help retail investors find their way around the cryptocurrency.
“Buying in a fund wrapper is probably more familiar to the retail investor than anything,” he said. In addition, working with a fund means contacting the company that manages the fund for any questions or account information you may need, such as: B. setting a password, tracking profits and losses, or collecting documents to file your taxes.
The majority of people should spend more time studying than buying.
Of course, these services come with a cost – different funds come with different fees that people should research before putting money into them, Bonaparte said.
People could also invest in funds that are exposed to cryptocurrencies and blockchain technology, such as Ark Next Generation’s next generation internet exchange-traded fund. For example, the ETF is exposed to artificial intelligence, big data, cloud computing and blockchain.
Of course, some investors will still want to hold digital coins on their own. More than a quarter of Americans plan to invest in cryptocurrency this year. This is according to a survey by Piplsay Research, which was carried out in February of more than 30,000 people. According to the report, half consider investing in cryptocurrency to be safe.
If you want to invest directly in Bitcoin or any other cryptocurrency, experts recommend learning as much as you can first and only investing an amount that you are happy to lose and hold for the long term.
“The majority of people should spend more time studying than buying,” Ross said, referring to cryptocurrency.
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Disclosure: NBCUniversal and Comcast Ventures are investors in Acorns.