Bitcoin had a smash hit growth in the past decade by having skyrocketing prices and gaining the support and acceptance of individuals and banks. But still, for many investors, bitcoin makes a complicated investment because bitcoin is volatile, expensive, cannot be purchased easily, and isn’t backed by the government.
Most people find it challenging to invest in bitcoin because bitcoin’s price is high. But in reality, there are many ways through which people can invest in bitcoin and other cryptocurrencies or blockchain technology without even holding the digital coins. While not holding coins provides a shield to investors, but it isn’t a complete shield that will safeguard investors from the volatility of cryptocurrencies. But it can provide a bit of protection from loss. Download to know the Bitcoin price in 2021 and to trade bitcoin securely.
Let’s explore few ways to invest in bitcoin or other cryptocurrencies without holding the coins.
Invest in companies that are work on blockchain technology or bitcoin
One good way investors get exposure to bitcoin or other cryptocurrencies is by investing in publicly traded companies and have either invested in bitcoin or work on the blockchain technology on which bitcoin is built. There are few companies that allow their users to trade bitcoin on their platform, and additionally, there are many companies that are focusing on the underlying technology of Bitcoin. Some big tech-savvy companies are already using blockchain in their business. Moreover, there is underlying hardware in which people can invest to have disclosure to cryptocurrencies without holding them.
Buy stocks of a company that holds bitcoin
Another way best to invest in bitcoin without even holding is by buying stocks of a company that holds cryptocurrencies or deal in crypto-related services. This will provide investors a great exposure to a vast number of publicly traded companies or businesses through various sectors that deal in bitcoin or allow their users to store or pay with bitcoin and other cryptocurrencies.
Big companies like MicroStrategy and Tesla are investing in bitcoin, and Elon Musk, the CEO of Tesla, has purchased around $1.5 billion worth of bitcoin. Tesla has made an announcement that it will start accepting digital currencies as a payment method. Investing in stocks of a company is safe and easy instead of directly investing in a cryptocurrency. Investors can do this directly through a brokerage account that financial institutions manage, as this will provide you more security and will be easy to use.
Cryptocurrency fund
Investors can also choose another way to invest in bitcoin by investing in funds that hold cryptocurrencies like bitcoin. Currently, many companies are helping investors shift to cryptocurrencies to make investments and trust in bitcoin. Buying bitcoin through a cryptocurrency fund is way better for retail investors. Additionally, working with cryptocurrency funds will make investors deal with companies that administer the fund for queries and other accounts that investors require, like documents for filing taxes, setting passwords, tracking losses and gains.
These services are chargeable, but different funds have different fees connected with them, and therefore as an investor, you must do proper research before investing in a cryptocurrency fund. Investors could invest in crypto funds and gain exposure to bitcoin and blockchain as well.
Investment strategies
- Buy and HODL bitcoin
HODLing bitcoin means holding bitcoin for dear life. Investors invest in bitcoin and hold it to gain long-term gains. People who buy and hodl bitcoin are those people that believe in the long-term prosperity of bitcoin, and they continue to hodl bitcoin for the long term if they observe volatility in the bitcoin market for the short term.
- Short positions
During the bitcoin bubble, some investors tend to bet on decreasing the value of bitcoin. Investors who sell bitcoin at a specific price then try to again invest in bitcoin at a low price.
- Long positions
Some investors desire to have immediate return after investing in bitcoin and tend to sell bitcoin when the price increases. In reality, there are multiple ways to achieve this, which include relying on the volatile market of bitcoin to gain higher returns and more. Investors can choose to lend their money to maximize the returns on their investment.
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