Find out one of the best, profit making and safest ways to invest your savings in cryptocurrency without actually purchasing it.
Cryptocurrency can be a profitable investment, but it’s also
high-risk, especially when you attempt to invest for the first time. Imagine,
even experienced investors are somewhat cautious while dealing with crypto. But
for those interested in cryptocurrency but not in purchasing or holding it,
there are still several ways to invest, although indirectly.
The
following article will help you find the right strategy, minimize the risks and
get much profit, so continue reading.
Cryptocurrencies like Bitcoin, Ethereum, and Dogecoin have
conquered the world over the past few years, and some investors are plunging
into the crypto business, hoping to make a fortune.
With
perpetual forecasts and market analysis, there is still a great chance to fail.
The future is unclear right now because things are rapidly changing. Under the
pressure of the COVID-19 pandemic, it’s equally possible that cryptocurrency
could become worthless one day. Nevertheless, nowadays, it’s hard to ignore the
temptation of cryptocurrency as it is on the rise.
Let’s consider some ways investors can follow to invest in
cryptocurrencies without actually owning them.
Invest in Cryptocurrency-Holding Companies
When most people decide to buy cryptocurrency, they usually mean
getting the currencies directly, such as Bitcoin tokens. But actually, there is
no need to purchase the tokens themselves as it’s better to invest in crypto
stocks.
A
crypto stock is an organization that is somehow linked to the cryptocurrency
movement. An investor gets indirect access to Bitcoin, for example, by
investing in companies that have them on their balance sheets or operate
digital currency-related services. People can pick up from a significant number
of publicly traded enterprises that meet this criterion.
Tesla
Tesla
spent $1.5 billion in Bitcoin and initially agreed to accept it as a payment
for its products. However, the company recently gave up the idea of accepting
Bitcoin and even sold the majority of its Bitcoin supply. Later, Elon Musk also
implied that Tesla might have sold its entire Bitcoin holdings. He explained
his decision not to back Bitcoin anymore because Bitcoin mining is not
eco-friendly. Musk has endorsed Dogecoin, and people suppose that Dogecoin
could be his currency of choice as he constantly welcomes it in his
Tweeter.
MicroStrategy
Virginia-based
business intelligence company MicroStrategy is renowned for its significant
investment in Bitcoin. In August 2020, MicroStrategy invested $250 million in
Bitcoin, explaining this decision with declining returns from cash, a weakening
dollar, and other significant economic factors. In total, the company has
invested more than $2 billion in Bitcoin ($24,311 per unit), and its stock
price now highly depends on the bounces in Bitcoin’s price.
Coinbase
Coinbase
is the first US company to operate a cryptocurrency exchange platform listed on
the US Nasdaq exchange. In April, the company announced an increase to $1.8
billion, up from $190.6 million the previous year. The jump was provoked due to
the price rise of Bitcoin over that time.
By
the way, Nasdaq set a reference price of $250.00 per share, giving the company
an estimated value of $47 billion. At the end of its first day of trading,
Coinbase closed at $328.28 per share.
In
early June 2021, Coinbase also began dealing with Dogecoin available for
Coinbase Pro users.
A Tip to Investors
It’s crucial to avoid buying a stock just because it’s connected
with cryptocurrency. If a company has weak potential and crypto does not
succeed over a long time span, that stock will experience a hard time
recovering. On the other hand, strong companies are more likely to overcome the
crisis despite any movements in the crypto market.
While
considering stocks, be sure to do thorough research. Is the company financially
healthy? Does it have an authoritative team of professionals? Does it have a
competitive advantage in its field? With all these parameters, it will be
easier to have a big picture. For any company, it’s essential to see long-term
potential. If a business ends up failing, it won’t make any difference whether
it was linked to the cryptocurrency or not.
Invest In Companies That Deal With Cryptocurrency-Related Sectors
An investor can also yield from cryptocurrencies by investing in
companies that deal with blockchain technology.
PayPal
is perhaps the most renowned company (200 million users) that lets investors
have indirect exposure to Bitcoin. Moreover, Galaxy Digital and Riot Blockchain
represent a diversified financial service and investment management innovator
in the digital asset, cryptocurrency, and blockchain technology sectors.
Besides,
such giants as Microsoft, Google, IBM, Amazon, and SAP are all involved to some
extent or are trying to use blockchain technology in multiple sides of their
business.
Another way is to put your money into companies that design the specialty hardware used by cryptocurrency miners, such as those that produce GPUs (graphic processing units) installed in computers for blockchain technology.
Nvidia
This company produces computer GPUs that are widely involved in cryptocurrency mining. They can’t power a computer monitor, but they can generate valuable digital coins. In February, as cryptocurrency prices went up, Nvidia released new processors specifically for mining crypto.
By the way, Nvidia offers a pro-level cryptocurrency mining GPU that allows miners to get maximum performance.
There are many ways you can expose your portfolio to cryptocurrency without actually buying coins, but approach investing with caution and use all of your diligence as you would deal with any other risky investment.
None of these stocks are guaranteed to succeed. Anytime they may actually start experiencing unpredicted stress because of market volatility and rapidly changing processes in global economics. Just like any crypto and non-crypto investment, be ready to accept the risks associated with it.
By - Pranit Bhandari