If you want to buy cryptocurrency through a third party, you can take advantage of the growing number of alternative investment options. For example, Grayscale Bitcoin Trust allows investors to invest in Bitcoin through a traditional investment fund that is, in some ways, like an ETF. Shares of this fund trade under the symbol GBTC on the OTC exchange OTCQX and can be purchased through your brokerage account.
Another way to gain indirect exposure to Bitcoin and the cryptocurrency industry is to use other ETFs focused on the cryptocurrency and blockchain industry, such as Siren NASDAQ NexGen Economic (BCLN), Bitwise Crypto Industry Innovators (BITQ) and Capital Link NextGen Protocol ETF (KOIN) . Consider the fees and risks of investing in an ETF, especially if it focuses on a relatively new sector.
Things to pay attention to after investing in Bitcoin
Bitcoin is risky and volatile. Prices go up and down very quickly and sometimes without warning. One Twitter message from Elon Musk or one negative message from a government official could be enough to cause Bitcoin’s value to plummet.
While Bitcoin and other cryptocurrencies may be reasonable assets to hold in your portfolio, don’t invest more than you can afford to lose and consider holding cryptocurrencies as a relatively small portion of your total investment.
If you do it right and sell your Bitcoin for a profit, it’s important to note that Bitcoin sales are taxable. So set aside enough money to cover your tax bill if you expect a significant capital gains tax after a profitable crypto sale or trade. Should I invest in Bitcoin? Everyone has to make their own choice as to whether they think the price of Bitcoin will go “to the moon” or to the landfill. If you decide to invest in Bitcoin, invest cautiously and avoid devoting too much of your net worth to this highly volatile asset.
If the idea of actively trading stocks scares you, you probably won’t like the high-speed, 24/7 cryptocurrency markets. But if you have the courage to take risks and aren’t afraid to ride out the ups and downs of Bitcoin’s price, there’s no reason why Bitcoin can’t be part of your long-term investment trading strategy. Advanced strategies for investing in Bitcoin
If you like the Bitcoin market, you can enhance your strategy to include Bitcoin futures, decentralized exchanges, and automated trading strategies.
Bitcoin futures, like other commodity futures, are derivatives with Bitcoin as the underlying security. Derivatives are typically riskier than investing directly in the underlying security, which means Bitcoin futures are even riskier than buying Bitcoin directly.
Although it may be riskier and requires a better understanding of cryptocurrencies, another way to buy Bitcoin is through a decentralized exchange. Unlike Kraken or Gemini, which are centralized exchanges, platforms like Exodus and Bisq allow you to connect directly with third-party buyers or sellers. Exodus does this through its app, while Bisq has software you can run on your computer to give you access to the peer-to-peer network.