How to Invest in Cryptocurrency
Cryptocurrency is the digital frenzy that saw the light, more than a decade ago. Once humble in new beginnings with very little market cap for many to hold their interest-today the scenario could not be more different. Cryptocurrency is something that not all can jump on board with yet, the clear and undeniable fact today is, cryptocurrency has hit all time levels in terms of circulation and investment. It is hard to believe that the once niche and small market of Bitcoin, has managed to jump so significantly within the space of a year ($6,000 value to $60,000). Cryptocurrency shares much excitement, with many investors left either jumping head first into the deep end, or being on the complete opposite end of the scale, by barely even dipping their toes onto the shallows.
It is an obvious fact that not many understand how to actually invest into cryptocurrency, and that is what is physically stopping them joining the bandwagon. For those that are sceptical on how to move forward with their interest, there is actually a way to gain exposure without physically buying it. Sure, cryptocurrency has taken over the global markets, from tech to gambling, there is not a day goes by where markets don’t try to integrate the crypto experience within reach of consumers. Take the gambling market for example, many today are using betting offers and promotions with digital crypto wallets, as a way for members to join and maintain their complete anonymity. Allowing gamblers to evade taxes, legislations of gambling and so much more. The decentralised system of crypto, has become the future, and knowing how to get involved sooner, rather than later is vital.
Invest in the companies with crypto holdings
If you are still educating yourself on the workings of cryptocurrency, understanding which currencies hold the largest cap in the market, will help you understand which are more invested in on a regional level. However, did you know that many companies that are publicly traded, also have cryptocurrency holdings? The easiest way of minimising risk, is by using the success of publicly traded companies as a buffer. Of course, what will really matter is how much these traded companies carry crypto on their balance sheets.
For example, as of June 30, 2021, Tesla had over $1.3 billion in digital assets. This was only 2.45 of the overall total assets of Tesla. Meaning, should the assets increase on the market and trading value, this is predominantly stock value rather than stocks. Therefore, investing within companies that have a predominant crypto portfolio in assets, makes greater sense to find value overall.
Cryptocurrency infrastructure investment
An alternative way of making an investment with exposure to the cryptocurrency market, is to actually invest a stake within companies that are tied to the actual crypto industry itself. Currently, a large surge in Asian institutions operate their newfound entities predominantly in cryptocurrency, meaning with the right research and understanding of the investment infrastructure, investors can publicly buy and sell cryptocurrency.
This process works in a very similar way to investing into the commodity of gold. The infrastructure which operates it, can be invested in, as can the commodity itself. An example of this is Riot Blockchain Inc. who publicly base their focus on the mining of cryptocurrency and have founded the infrastructure of investment opportunity that comes with this very system mentioned above. Coinbase is a very good platform that can allow such activities to be explored further.
The last thing worth mentioning, is the gearing up towards exchange-traded funds. While there are no approved ETFs at the moment, we know that the demand is there, meaning it certainly could be a very promising opening to many. While there have been many failed attempts in ETFs making actual solid ground, it is just a matter of time for regulation in this niche to make itself known and possible.
This option would allow those who are not massively comfortable with the idea of investing into cryptocurrency, to invest alternatively into digital assets that get exposed to bitcoin and other predominant cryptocurrencies.
Be cautious with investing
Of course, with all that was said above, one must always be cautious when it comes to investing into cryptocurrency directly. Utilising the methods we listed, will help to mitigate risks of course, and can aid the journey in the long term, as well as gaining the physical confidence to explore further afield. Directly investing into the digital currency can be quite volatile, especially if you choose to invest in the coins that have minimal market cap, in comparison to the larger assets. The most important thing is to navigate with ease, educate yourself on the momentum of this industry, and rationally find your feet.