Cryptocurrency is the new big thing in the investment space, and both retail and corporate investors have shown much interest in the asset class. Amid this interest, though, there's the fear of the dangers associated with cryptocurrencies, and many people would rather not buy the asset directly. Most investors would invest in it, but in a way that is safer than buying the assets directly and being in charge. The following are five primary ways to invest in crypto assets without buying them.
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1. Crypto Futures ETFs
If you're looking to invest in crypto without actually buying the asset, one of the best ways to do it is with a futures crypto exchange trust fund (ETF). If you know how futures trading generally works, you know that you can trade futures without having to buy the underlying asset, say gold.
You enter into a contract to buy or sell an asset in the future at a set price, regardless of its trading price when the trade is executed. This type of investment is more like a bet concerning the asset's price. Crypto futures trading works pretty much the same way, only this time, the underlying asset is a cryptocurrency such as Bitcoin, Ethereum, or any other altcoin.
By trading crypto futures, you can bet on the underlying asset's price for the future without ever owning the underlying cryptocurrency. This way, changes in the asset's value due to volatility do not affect your outcome.
This is why the securities and exchange commission (SEC) has approved several crypto futures ETFs but not a spot crypto ETF, which exposes investors directly to the asset.
Through a crypto futures ETF like ProShares Bitcoin Strategy ETF (BITO), you can safely trade futures contracts and avoid the volatility that characterizes the crypto market.
However, doing this requires some advanced trading skills, so it isn't for everyone. If you think you're up to the task, you can try it as a way of investing in crypto without buying.
2. Blockchain Stocks
Another way to be in crypto without holding any crypto asset is to buy blockchain or crypto stocks. One of the world's biggest crypto exchanges, Coinbase, became the first crypto exchange to go public in 2021, giving investors the opportunity to buy its stocks.
By buying stocks from Coinbase, you indirectly invest in cryptocurrencies, and every gain in the crypto industry will reflect in your investment. While you do not own any cryptocurrency, whatever happens to the crypto market will affect your investment, be it positive or negative.
There are many other such stocks to buy, including Riot Blockchain (RIOT), owned by Riot; Canaan (CAN), owned by ASIC chip design and research company Canaan; HIVE Blockchain Technologies (HIVE), owned by crypto miner Hive; and Bitfarms (BITF), owned by bitcoin mining company Bitfarms.
3. Crypto IRAs and 401ks
Do you still have a few years until retirement? Then you can incorporate crypto into your 401(k). This option is available to those who wish to invest long-term as part of their savings account against retirement.
The trick is getting your boss to agree to let you save in crypto. If your employer is open to the option, you can have them save a percentage of your monthly payment in Bitcoin or any other cryptocurrency of your choice.
One company that offers this to its customers in the US is Fidelity. If you show interest, they will buy the asset and hold it on your behalf in an account mainly for crypto assets.
Crypto IRAs are a similar option to 401k, only that they do not require an employer's permission. You can simply swap your 401k account into an IRA and use it to invest in any cryptocurrency of your choice. There are many crypto IRAs that offer several crypto options for investing.
A crypto IRA doesn't only allow you to invest in crypto; it also allows you to trade them on the IRA platform. However, the IRA manages the funds on your behalf, usually with insurance coverage in case something goes wrong.
4. Crypto Mining
If you find all the above options impractical to use, another option is just to mine the cryptocurrencies yourself. However, this can be very demanding, especially mining Bitcoin, which has become more complicated over the years.
You will need advanced mining computers known as ASICs to mine successfully because its difficulty has increased significantly.
Altcoins may be easier to mine, some of which you can do on your laptop computer. Essentially, you're not buying the asset but rather playing the role of a miner and, in return, getting rewarded with cryptocurrency units.
You can then hold it as an investment until you wish to trade it for cash or other assets. This entails managing the assets yourself in your own wallet.
5. Credit Card Rewards
You can also get your hands on cryptocurrencies using credit cards with cashback rewards. If you use these cards, you can also benefit from them by getting cryptocurrency cashback. There are many cards out there that will reward you with crypto for making payments on these top crypto cashback sites.
Cryptocurrency startups, such as exchanges, usually issue these cards. Some non-crypto startups, such as Venmo, also issue cashback credit cards. While it does not reward you with crypto directly, you can choose crypto as an option for redeeming your cashback rewards.
Credit card rewards may seem initially insignificant, but if you keep gathering them, they can add up quickly, and you'll end up with a substantial crypto portfolio in no time.
Like crypto mining, you'll end up managing the assets yourself, which is the part that most people try to avoid. If you're not comfortable managing a portfolio, you may still use the crypto to invest in other ways that do not require direct portfolio management.
Which Is Your Favorite?
These are the ways to invest in crypto without directly buying it. You may find that some methods are more suitable for you than others, and you should go with what works for you.
If you don't mind managing the crypto assets yourself, you can use any of the methods discussed to accumulate crypto. However, if you'd rather let other people manage for you, the methods such as futures ETFs and IRAs will work better. Ultimately, the idea is to benefit from the crypto market without paying for the assets.
