How to invest in cryptocurrency without actually buying it
India is currently the seventh most ‘crypto-aware’ country. If you too want to invest in crypto but are feeling nervous, we got your back!
The craze around Bitcoin and other cryptos among India is significant. India is currently the 7th most ‘crypto-aware’ country, ahead of countries such as Australia, Singapore, Canada, France, Germany, Japan, etc.
Top 10 crypto aware nations:
- South Africa
The price of one Bitcoin jumped from just under $5,000 (roughly Rs. 3.74 lakhs) in March 2020 to over $60,000 (roughly Rs. 44.91 lakhs) as of this April. Bitcoin price in India stood at Rs. 42.77 lakhs as of October 12 (11:00AM IST).
If you are an investor who is cautiously curious, here are ways to gain exposure to cryptocurrency without buying it, and if you do decide to purchase, how to lower your risk.
1. Invest in companies with cryptocurrency holdings
Some publicly traded companies have cryptocurrency holdings. When you thinking about investing in a company because they have exposure to crypto, the scope of negative impact and risk from direct exposure to crypto reduces manifold.
2. Invest in cryptocurrency infrastructure
Another way to gain exposure is to invest in companies that have a stake in the cryptocurrency industry. Coinbase is a platform where investors can buy and sell cryptocurrency — and it’s publicly traded.
3. Cryptocurrency ETF
While there are currently no cryptocurrency exchange-traded funds that have been approved by the Securities and Exchange Commission, there is demand for them. A cryptocurrency ETF would operate much like any other ETF, but instead of tracking a market exchange like the S&P 500, it would track a cryptocurrency. For instance, a Bitcoin ETF would track the price of Bitcoin.
4. Use caution if investing directly
If you’re willing to invest in cryptocurrency directly, there are a few ways you can mitigate your risk. One way to do this is to reduce the amount of money you invest.
Some credit cards offer cryptocurrency rewards in a similar way as cashback or miles. If you decide to add cryptocurrency to your portfolio by way of rewards, you don’t even have to use your own dollars to do so.
Another way to reduce your risk is to invest in stablecoins, which are similar to traditional cryptocurrencies but are backed by real-world assets, making them less prone to significant drops in value.
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