If you are attracted by eye-watering returns enjoyed by people who bought cryptocurrencies, but are hesitant about buying actual cryptocurrencies because the technical, security and regulatory risks associated, here are some ways you can still gain exposure to the growth of crypto as an asset class, without actually buying a token.
Invest in Listed Companies in the Crypto Industry
There are plenty of publicly-traded companies that have significant exposure to the value of cryptocurrencies, whether because they are directly involved in crypto, hold cryptocurrencies on their balance sheets, or are directly involved in providing goods and services essential to crypto activities.
These include Coinbase (NASDAQ: COIN), IBM (NYSE:IBM), NVIDIA (NASDAQ: NVDA), Amazon (NASDAQ:AMZN), PayPal (NAQDAQ: PYPL), among others.
Buy a Fund that Tracks a Basket of Cryptocurrencies
Instead of buying individual cryptocurrencies, which can be expensive, not very liquid, and very onerous to remain diversified, you could instead buy ETFs (Exchange Traded Funds) that track a basket of cryptocurrencies.
This allows you to gain exposure to hundreds, or thousands, or different cryptocurrencies, or just one cryptocurrency, in a convenient, cost-effective manner.
It is worth noting that not all of these funds buy and hold the underlying cryptocurrencies. For example, the way the ProShares Bitcoin Strategy ETF tracks the price of BitCoin is by buying BitCoin futures, which is a financial instrument that could allow funds to replicate price movements of assets like BitCoin.
Trade Crypto-Related Contracts for Difference
For those who day trade, Contracts For Difference (CFD) is a popular method for making leveraged trades. Many major CFD providers allow traders to buy long and short cryptocurrency-related CFDs.
This allows traders to benefit from price fluctuations of cryptocurrencies, without actually having to open a wallet or buy crypto from an exchange.
