Bitcoin was invented with an intention to replace the fiat (government-issued) currencies. Since Bitcoin came into existence in 2009, it has transformed into a highly active asset for investing. It is used in transactions where traders are ready to accept it.
There are various ways in which you can invest in cryptocurrencies, including bitcoin.
Investment Types
Over the past few years, different new ways have come through which one can invest in bitcoin; it includes ETFs and bitcoin trusts comprised of companies related to bitcoin.
Purchasing standalone Bitcoin
The primary way to spend Bitcoin is by buying a fraction of a coin or a coin through trending trading applications such as Coinbase. It involves three stages: first, providing the personal details for setting up an account, second is depositing money, and third is to purchase bitcoin with the deposited amount. Some platforms fix the rates of minimum deposit for buying bitcoin. After this, like any ETF or stock, you can access or check the bitcoin performance, price, and the options to purchase and sell. In the case you buy a coin, your bitcoin will be safe and kept in an encrypted wallet (only you can access it).
GBTC
Investors interested in investing in cryptocurrency, particularly bitcoin through the capital market can opt an investment platform like GBTC (Grayscale Bitcoin Investment Trust).
Grayscale Bitcoin Investment provides various advantages which makes it attractive for traders to buy bitcoin from this platform. The stocks of GBTC are suitable for particular IRA. Both IRA and other brokerage and trader accounts. Thus, they allow easy access for all type and levels of traders in a large variety of accounts,
The traders are provided with a commodity which has the worth of one-tenth of a coin. For instance, if the value of currency or bitcoin is $2,000, each stock of GBTC should have an overall net cost of $200. This price is not without costs because this platform maintains a fee of 2%, which influences the underlying value.
In reality, traders are spending on security, liquidity (refers to conversion to cash) and ease of use. It is done by regulating firm offline storage mechanisms. It is the best platform for the trader who does not have technical knowledge on how to access the market of bitcoin safely.
Important: GBTC trades on the various markets but majorly on the capital market, that allows it to trade at a discount or premium of its overall net asset value (NAV).
Amplify Transformational Data Sharing ETF
It has holdings in fifteen different companies and is an actively managed fund traded on the NYSC area (New York Stock Exchange Arca). These firms invest in other firms that are developing or are involved with blockchain technologies. The net expense ratio of BLOK's is 0.70%.
Bitwise ten Private Index Fund
The Bitwise ten private index fund depends on the Bitwise ten large-cap index of crypto which is a box of large capacity currencies or coins in which the firm tries to give security and the ease management of a conventional ETF.
The Bitwise ten private needs a minimum investment of $25,000 and has a 2.5% fee ration. Like GBTC, the securities in this too are held in cold storage or offline, providing the necessary protection for its traders.
Investment Strategies
There are some of the investment strategies which one can follow:
1) Bitcoin Investment- hold and buy
2) Long Positions (on Bitcoin)
3) Short Positions (on Bitcoin)
Understanding Risk involved in bitcoin investment
The risk involved in such investment are:
1) Bitcoin is a Volatile Asset
2) Exchanges May Have Hacks and Glitches
The Bottom Line
The drawbacks of bitcoin investment are restrictive. However, it is very essential that a trader should know what it is doing and also be careful while investing. An investor should always remember never to spend more than the amount he or she can afford to lose. It is often considered as a high-risk investment which means that it should signify a relatively small portion of a trader's investment portfolio.
If you are the one interested in bitcoin investment, then you have various options. Either purchase it from the exchange or from a trustworthy broker.
ROinvesting is the top broker in this list. They provide excellent services in the crypto market and is a well-regulated firm. Check ROinvesting reviews before starting the trade.
