crypto strategy

How to invest in crypto without buying crypto

If you are looking to buy cryptocurrencies, you can choose between Bitcoin, Ethereum, and other altcoins. There are, however, also indirect ways to explore the world of crypto. Here is an overview of what you need to know if you want to invest in crypto without buying crypto.

Main takeaways

  • Cryptocurrency is a relatively new investment with unique risks.
  • Investing directly in cryptocurrencies can be difficult due to its volatility, and some investors prefer to invest through more traditional investment vehicles.
  • You can invest in crypto indirectly through various cryptocurrency-related funds and stocks.

What is Indirect Crypto Investing?

If you don’t want to open an account on a crypto exchange and buy cryptocurrencies, you’re out of luck. You can make an indirect investment in cryptocurrency where you gain exposure to it without buying it yourself. Indirect investing is done using traditional methods like stocks, mutual funds, and exchange-traded funds (ETFs).

Again, there are pros and cons to consider, including security, fees, and risk of loss. When you buy cryptocurrency through a third party, that third party is going to make money one way or another, so you need to take that into account when deciding whether to buy cryptocurrency. crypto using an indirect investment.

Crypto ETFs and Mutual Funds

Investment funds are the first way to buy crypto without buying crypto directly. One of the notable early entrants into this offering is Grayscale Bitcoin Trust. Although it functions much like an ETF, it is legally a completely different type of entity. However, investing in GBTC through your brokerage account will achieve a similar result to buying a Bitcoin fund. The investment price will rise and fall with the market price of Bitcoin.

The big downside of Grayscale is the 2% expense ratio. They just charge 2% to buy Bitcoin and hold it in a wallet in your name. You can do it yourself quite easily without paying an ongoing 2% fee.

Other funds include ProShares Bitcoin Strategy ETF (BITO), Valkyrie Bitcoin Strategy ETF (BTF), VanEck Bitcoin Strategy ETF (XBTF), Global X Blockchain & Bitcoin Strategy ETF (BITS), and Bitwise 10 Crypto Index Fund ( bitw). The fees and underlying investments vary depending on the fund you choose, so be sure to read the prospectus carefully and know what you’re getting.

Cryptocurrency and blockchain stocks

If you want to buy a stock that exposes you to crypto, you can choose between companies that work in the blockchain industry and companies that invest in or hold cryptocurrency on their balance sheets.

Companies in the cryptocurrency industry are involved in cryptocurrency mining, software development, and other services. Stocks include Riot Blockchain (RIOT), Canaan (CAN), HIVE Blockchain Technologies (HIVE) and Bitfarms (BITF). Coinbase (COIN) is one of the largest and most recognized cryptocurrency exchanges and stocks.

Typically, when there is a downward trend in crypto prices, many cryptocurrency stocks also struggle. Keep these risks in mind when buying, and consider working with a trusted financial professional if you have any doubts about your investment decision or plans.

Bonus Tip: Credit Card Rewards

A final method to fill your cryptocurrency wallet without opening your fiat wallet is to use credit card rewards. Several cards let you earn crypto when you swipe, tap, dip, click, or do anything else to use a credit card for payment.

Noteworthy personal cryptocurrency credit cards are BlockFi Rewards Visa Signature Card, Gemini Credit Card, and Bitcoin Rewards Upgrade Credit Card. The exchange and Coinbase also offer a rewards card offer.

Some cards, like the SoFi personal credit card or the Venmo credit card, offer flexible redemption options, including cryptocurrency. When you earn crypto as a credit card reward, you are investing in crypto without buying crypto. Even if its value goes down, you haven’t paid for the crypto, so all you walk away with is profit.

The essential

Cryptocurrencies are sometimes hailed as a technology that will change the world. Investing in crypto indirectly is a good option for those who want to be part of new technology, but with caution. As a result, the portfolio will be more diversified and risk will be spread more evenly.

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