There are less hazardous and potentially less expensive indirect methods of investing in crypto without having to purchase cryptocurrency. These include investing in futures and options trading, crypto-related stocks, and exchange-traded funds (ETFs). Below, we will delve into more details on these methods.
What Is Indirect Crypto Investing?
Instead of having to create an account on a cryptocurrency exchange and purchasing crypto, indirect crypto investing offers other alternatives. For example, traditional methods like mutual funds, exchange-traded funds (ETFs), and stocks enable people to invest indirectly in cryptocurrencies.
This method, nonetheless has its advantages and disadvantages. Some of the drawbacks affect the cost, loss potential, and security. Here are a few indirect crypto investment strategies.
Cryptocurrency ETFs
Typically, the first place to look for wide access to a specific asset class is an exchange-traded fund (ETF). There are ETFs available that track almost anything. Much recently, the Securities and Exchange Commission accepted applications for the first 11 spot cryptocurrency exchange-traded funds (ETFs) in January 2024, following years of denials. Prior to this, the regulator only approved ETFs that held contracts for bitcoin futures.
Cryptocurrency and Blockchain Stocks
Another alternative is through Crypto and Blockchain stocks. This involves purchasing stocks through companies that use blockchain technology and those that invest in or have crypto listed on their balance sheets. These types of stocks will expose you to cryptocurrency without actually buying crypto. Among the notable stocks are Canaan (CAN), HIVE Blockchain Technologies (HIVE), Bitfarms (BITF), and Riot Blockchain (RIOT).
As an alternative, some companies directly own cryptocurrency. One of the biggest and most well-known exchanges for cryptocurrencies that is openly traded is Coinbase (COIN).
Credit Card Rewards
One other way to add cryptocurrencies to your portfolio without directly investing is to use credit card rewards. When you use a credit card for payment in any way, you can earn cryptocurrency with a number of these cards. The Upgrade Bitcoin Rewards Visa card, BlockFi Rewards Visa Signature card, and Gemini Credit Card are a few Bitcoin credit card examples. Rewards cards are also offered by Coinbase and the Crypto.com exchange.
Certain credit cards provide a variety of redemption choices, including cryptocurrencies, such as the Venmo credit card. When you receive cryptocurrency as a credit card reward, you invest in it without really purchasing any. You didn’t pay for the cryptocurrency, so even if its value decreases, everything you accrue is equivalent to any other credit card point system.
Takeaways
If you are looking to bypass the hassle of setting up a profile on a cryptocurrency exchange and finding ways to store your digital coins safely, indirect crypto investing is a suitable alternative. Directly investing in crypto could mean that a sizable portion of one’s funds are invested in a single, highly volatile asset. Fortunately, these options provide alternate ways to accomplish your objective. Nonetheless, keep in mind that indirect crypto investing has its own drawbacks.
