There Are Now More Ways Than Ever to Invest in Crypto
Bitcoin’s recent price boom has spiked interest in crypto, hailing a new wave of adoption that creates a kind of snowball effect. The current bull run likely stems, at least in part, from the news that big tech firms are increasingly moving towards crypto. Facebook’s Libra announcement undoubtedly contributed to the price of BTC rising past $13k for the first time in 18 months. Apple announced the iPhone CryptoKit at the Worldwide Developers Conference in June, and Samsung has already integrated a crypto wallet into the Galaxy S10.
The fact that these flagship companies are nailing their blockchain colors to the mast and pushing up the value of crypto is also helping to attract an influx of newcomers to the space. A recent survey by HBUS, part of the Huobi exchange, showed that awareness of crypto has more than doubled since 2018. Even the uber-rich are getting in on the act — Bloomberg recently reported that billionaire investor and philanthropist Henry Kravis had made his first foray into cryptocurrency investing.
Fortunately for crypto newcomers, the options for entering the world of crypto are now far more diverse than they used to be. After all, even as late as 2017, the main entryway was to use Coinbase to buy one of the leading cryptos such as BTC or ETH. Anyone wanting to diversify their portfolio then had to send coins to a crypto-to-crypto exchange. Of course, Coinbase has now expanded its footprint into a broader range of altcoins. However, there are now also other avenues for getting into cryptocurrencies.
Depending on how you want to invest in crypto or blockchain, there are plenty of options to choose from. One way is an index fund for cryptocurrencies. Crypto20, for example, tracks a basket of twenty cryptocurrencies including Bitcoin and Ethereum, but also many major alts including Stellar Lumens and Binance Coin. The fund is tokenized, so investors only need to buy the C20 token to participate in the full index.
Of course, index funds just track the markets. For those who prefer an actively managed fund, AMFEIX may be a better choice. The fund actively trades a selection of fiat-to crypto and crypto-to-crypto pairings with a view of returning a profit to investors. One key advantage is that AMFEIX offers its own integrated wallet developed on the Ethereum blockchain, meaning that holdings are decentralized and completely secure. Another aspect, which may appeal to the privacy-minded, is that investors can create an account pseudo-anonymously.
A third option is to buy into a fund which invests in blockchain and cryptocurrency projects and companies. There are many funds of this type, but perhaps one of the best-known is Pantera Capital. The fund has put venture capital into blockchain startups, including regulated futures exchange Bakkt, and privacy-focused web browser Brave.
One of the biggest challenges for newcomers entering the cryptocurrency markets is knowledge. Successful trading requires an understanding of the markets, which is where social trading can be an invaluable resource. Social trading involves traders sharing their tips and techniques, meaning that newcomers can benefit from more experienced traders.
Perhaps the most well-known of these platforms is eToro, which started in 2008 with social trading in forex, commodities, and stocks but expanded into cryptocurrencies in 2017. Another example is BQT, which is currently building out its social trading ecosystem. This features a social trading exchange but also includes the BQT University, which offers courses on blockchain and trading for learners of all levels. This may be perhaps the most attractive feature for a new entrant to crypto.
Cryptocurrency futures, or contracts for difference, offer a means of profiting from price fluctuations of cryptocurrency without having to hold the asset itself. This has the added advantage of being able to take a short position on crypto.
Cryptocurrency futures are having something of a moment right now, with Binance having recently confirmed it will soon be launching a futures platform with up to 20x leverage. However, the current market leader in Bitcoin futures is BitMEX (Bitcoin Mercantile Exchange). It offers trading against several fiat currencies and a range of cryptos including Bitcoin, Ethereum, Monero, and XRP.
Many other exchanges now also have a futures offering, including Kraken, OKEx, and Huobi. However, fees, margin, and the range of trading pairs can vary between platforms.
That today’s newcomer has a range of options open for investing in cryptocurrency is a testament to how far the ecosystem has been developed over the recent years. With innovation at an all-time high, who knows how many other avenues in crypto will open up over the years to come?