How to invest in Bitcoin without actually buying BTC?
By Illia Kramarenko 435 31 Jan 2023
Investing in bitcoin does not always imply purchasing the very first cryptocurrency. This article will examine ways to invest in bitcoin without actually purchasing it.
Many people find purchasing cryptocurrencies to be a very difficult task. The storage and transfer of cryptocurrencies could be challenging for investors who previously only traded on stock exchanges. The absence of a clear legal framework scares institutionalists away. However, there are ways to profit from the crypto market's growth without purchasing cryptocurrencies.
1. Purchasing stocks of bitcoin-related companies
Investing in publicly traded bitcoin-related companies will allow you to profit from the volatility of bitcoin, as their stock prices frequently correlate with the price of BTC.
For instance, MicroStrategy holds millions of dollars in bitcoin, and MSTR's stock price highly correlates with BTC.
Shares of public mining companies such as Hut 8 and Riot Blockchain drop as the price of Bitcoin falls and rise during a bull trend in the crypto market. This is due to the fact that many mining companies do not sell bitcoins, but rather use them to fund investment projects or simply wait for better prices.
Coinbase, a publicly traded exchange, makes money through commissions. In theory, the price of COIN should rise when demand for digital assets rises since people buy and trade cryptocurrencies more frequently during a bull run.
2. Bitcoin mining
If you are unable or unwilling to buy Bitcoin directly, you can earn coins while ensuring the Bitcoin network's stability and security.
Setting up a mining farm is one of these methods.
The more money you put into mining equipment, the more Bitcoin you can make. Before it becomes profitable, though, it might take some time. Additionally, it should be considered that mining may no longer be profitable due to the decline in the price of bitcoin.
Other options are available for less tech-savvy users. Not too expensive, either. Users can, for example, join an existing mining pool or use cloud mining.
3. Bitcoin ETF
The investment vehicle of the stock market is exchange-traded funds that purchase bitcoin. The share price of the Bitcoin-ETF is correlated with the price of BTC.
A lack of regulations and storage issues prevent some investors from purchasing bitcoin directly. An ETF is a safe way to invest in bitcoin that is similar to purchasing shares from a stockbroker, thereby lowering the barrier to entry.
The catch is that only a few countries, like Canada or Brazil, currently permit the trading of Bitcoin spot ETFs.
The U.S. Securities and Exchange Commission (SEC) has previously rejected requests to launch a spot bitcoin ETF several times, claiming that the cryptocurrency market is very prone to manipulation. The SEC, on the other hand, has approved a number of futures ETFs that track the price of Bitcoin in the derivatives market rather than the spot price.