You can hardly miss the astounding growth rate and performance of some of the cryptocurrencies. An investment of $ 10 in bitcoin in 2010 would have become $ 400,000 in April 2021.
The excitement surrounding the cryptocurrencies makes those yet to invest feel like a kid trying to get to the pool party while his friends are already having a gala time. If you are also curious about the same, this article can help you have better knowledge and exposure about cryptocurrency without buying them.
Investment in Cryptocurrency Holding Companies
It can be a safe bet for you when you plan to have investments in cryptocurrency. Some of the publicly traded companies also hold cryptocurrencies. Your investment will have a buffer in the form of the holding company. You can bet on the success of such investment folio by the company.
When you plan to make such an investment, you should find out about the company's exposure to cryptocurrencies. It is better to refer to their balance sheet to know how much of their money is in crypto.
The balance sheet of the companies can help you to have many revelations. For example, Tesla has around $ 1.5 billion of investments in digital assets as of June 30, 2021. The tech giant attracted a lot of media attention, in the past, due to this investment and regular coverage aided by Elon Musk’s tweets. However, the investment equates to only 2.4% of the total assets of the company. A crucial aspect to note here is that if the value of these investments goes into billions, so can the stock price of Tesla too.
Investment in Cryptocurrency Infrastructure
One more way to passively invest in cryptocurrencies is to buy a company's share with stakes in the cryptocurrency industry. You can refer to the various platforms which allow the purchase and sale of cryptocurrencies and trade publicly.
Similar to your investments in precious metals like gold or platinum, you have the option to invest in the commodity directly. You can also choose to invest in the infrastructure around the commodity, materials needed for mining, miners, etc. In the same way, some companies specialize in crypto mining or operate in the blockchain space. However, there are not many entities operating in this field.
A prominent player operating in cryptocurrency mining and is also publicly traded is Riot Blockchain Inc. The company helps to build the infrastructure for cryptocurrency and aids in crypto-adjacent investment opportunities.
Although there are cryptocurrency exchange-traded funds in some countries for bitcoin, the same is yet to gain popularity. Similar to an ETF in the market, a cryptocurrency ETF will track a particular cryptocurrency.
Although there have been many attempts to have an ETF in the US-regulated cryptocurrency exchange, no significant development took place yet. Experts believe that soon it is likely to happen but can not quantify a time for the same. Once it materializes, it can serve as a great investment opportunity for those who are skeptical of directly investing in cryptocurrency.
Being Cautious Is the Key
When you decide to invest in cryptocurrency, there are various ways to mitigate your risk. You can choose to reduce the amount of investment to cut down the spread. The recent offers by some of the credit card companies include rewards in terms of cryptocurrencies. Such a method will help you not to invest your money directly and still create exposure for you.
Another safer way to invest in the cryptocurrency market is through StableCoins. These cryptocurrencies have real-world assets to back them. Thus, helping to curb the possibility of rapid fluctuations in prices.
It is worth mentioning that while cryptocurrency investments are on the rise, there is also a rise in fraudulent practices by scammers across the world. However, some companies help to recover money from a cryptocurrency scam. Such entities help to put up a case with the proper documentation and follow-ups to get the victims their money back from the fraudsters.
So there are various ways to mitigate your risk when you decide to have an investment in cryptocurrencies. You can choose not to invest directly in any digital currencies and yet have exposure in the market. Whichever investment tool you select, it is vital to be cautious all along.