Cryptocurrencies are inherently mysterious — as the name implies. Also, if you follow Warren Buffett’s advice and try not to invest in an incomprehensible business, it can be difficult to justify investing in a currency made of math instead of gold.
However, the extraordinary performance of some cryptocurrencies cannot be ignored. The price of 1 Bitcoin has risen from just under $ 5,000 in March 2020 to over $ 60,000 as of April this year.
The excitement surrounding digital currencies may make some investors feel like lonely kids at pool parties and want to join friends who are having fun at the deep end, but jumping in too tense. can not.
For investors who are cautiously interested, here are some ways to get exposure without buying cryptocurrencies and how to reduce your risk if you decide to buy one.
Investing with a cryptocurrency holding company
Think of this strategy as a cryptocurrency investment once deleted. Some listed companies have cryptocurrencies. And since they are betting on their success, you can do that too, and those companies act as a buffer.
“When they’re thinking of investing in a company because they’re exposed to cryptocurrencies, it actually runs the full range from how direct or indirect you are with respect to its exposure,” Bone Fide said. Douglas Bournepartt, Certified Financial Planner and President of New York City, says wealth in New York City. “It depends on how much of their balance sheet is in cryptocurrencies.”
Looking at the company’s balance sheet reveals the following: As of June 30, 2021, Tesla had $ 1.31 billion in digital assets. Technology giants have received a lot of media attention for their investment, of which $ 1.31 billion now accounts for about 2.4% of Tesla’s total assets. However, if the value of these assets soars, Tesla’s stock price could also rise, as cryptocurrencies may not work.
Investing in crypto infrastructure
Another way to gain exposure is to invest in a company that has a stake in the cryptocurrency industry. Coinbase is a public trading platform that allows investors to buy and sell cryptocurrencies.
“As with gold, you can invest in the infrastructure, miners, and materials needed for mining in or around the commodity itself, just like energy and oil,” says Boneparth. “And there are public companies that do business, especially in blockchain space, but not many.”
Riot Blockchain Inc. is one of the few listed companies focused on cryptocurrency mining. Among other things, Riot Blockchain helps build cryptocurrency infrastructure and offers another investment opportunity adjacent to cryptocurrencies.
Prepare for cryptocurrency ETFs
Currently, there are no cryptocurrency exchange-traded funds approved by the Securities and Exchange Commission, but there is demand for them. Cryptocurrency ETFs work much like any other ETF, but instead of tracking market exchanges like the S & P 500, they track cryptocurrencies. For example, Bitcoin ETFs track Bitcoin prices.
“There have been various attempts at ETFs, many of which have been rejected. Bitcoin ETFs are allowed in other countries, and I think that’s what will happen soon.” FTX.US, A cryptocurrency exchange regulated by the United States. “I can’t predict when this will happen, but I think it will happen. I think it will allow people who are reluctant to invest directly in digital assets to be exposed to Bitcoin. Cryptocurrency. “
There are numerous applications for cryptocurrency ETFs, and the SEC will decide on November 14, 2021 whether to approve investment manager Van Eck’s bid for Bitcoin ETFs.
Be careful when investing directly
If you are willing to invest directly in cryptocurrencies, there are several ways you can mitigate your risk. One way to do this is to invest less. Some credit cards offer cryptocurrency rewards in a manner similar to cashback and miles. If you decide to add cryptocurrencies to your portfolio as a reward, you don’t even have to spend your own dollars to do so.
Another way to reduce your risk is to invest in Stablecoin, Similar to traditional cryptocurrencies, but backed by real assets, it is less likely to lose significant value.
This article was provided to The Associated Press by the personal finance site Nerd Wallet. The content is for educational and informative purposes and does not constitute investment advice. Alana Benson is a writer for Nerd Wallet. Email: email@example.com
NerdWallet: Stablecoins: What are they and how they work https://bit.ly/nerdwallet-stablecoin
Copyright 2021 AP communication. all rights reserved. This material may not be published, broadcast, rewritten, or redistributed without permission.
How to Invest in Cryptocurrencies Without Buying Anything | Lifestyle
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