The digital currency was trading at just under $54,000 per coin on Friday 02/19/2021. as it hit the new level, and rose above $55,000 later in the session for a daily gain of more than 6%, according to Coin Metrics. The price of bitcoin has now gained about 360% over the past six months. Before the recent surge, the digital asset has never traded above $20,000.
Bitcoin “has started to get so big that it arguably creates its own demand as companies and institutions begin to make forays into a field they wouldn’t have touched a few months previously,” Deutsche Bank research strategist Jim Reid said in a note. “Ironically it is turning itself into a credible asset class to many by rallying so much of late and also by getting increasing institutional buy-in.” Pro-bitcoin investors and entrepreneurs celebrated the milestone on social media.
“From white paper to $1 Trillion. #Bitcoin is eating gold alive,” Gemini’s Cameron Winklevoss said.
“RIP bears,” said Anthony Pompliano, co-founder of Morgan Creek Digital Assets.
To be sure, not everyone on Wall Street has been convinced of bitcoin’s future prospects. Citadel Securities founder Ken Griffin said Friday that he was not interested in cryptocurrency, while researchers at JPMorgan have said bitcoin’s rally is unsustainable.
How to get into the crypto trade without holding bitcoin yourself?
There are a few ways that people can invest in cryptocurrency and even bitcoin, or the technology behind it, without holding any coins themselves. While it might not completely shield investors from cryptocurrency’s trademark volatility, it can give them some protection from loss.
Invest in companies that hold bitcoin or another cryptocurrency
One way to have exposure to bitcoin without holding it is to invest in the stocks of companies that have cryptocurrency-related services or hold coins themselves, said Ross.
That includes a wide group of publicly traded businesses throughout different sectors that have either added bitcoin to their balance sheet or have services for storing or paying with cryptocurrency.
Recently, companies such as Tesla and MicroStrategy have directly invested in bitcoin. Tesla bought $1.5 billion worth of bitcoin and said it would soon accept the digital currency as payment. MicroStrategy, an enterprise software company, said it plans to sell $600 million in convertible debt and use the proceeds to buy bitcoin.
Look at companies with technology related to bitcoin or blockchain
Another way that investors can get exposure to cryptocurrency is by investing in publicly traded companies that have technology related to trading coins or use blockchain, the technology that bitcoin is built on.
Experts also called out companies such as Square and Paypal that allow users to trade cryptocurrency on their platforms. In addition, companies such as Riot Blockchain and Galaxy Digital focus on cryptocurrency and the underlying technology. And, big technology names such as Microsoft, IBM, Google, SAP, and Amazon all use blockchain in different parts of their business.
There’s also underlying hardware that people could invest in to have exposure to crypto without holding coins.
Check out a cryptocurrency fund
It’s also possible to invest in funds that hold bitcoin and other cryptocurrencies, according to Doug Boneparth, CFP, and president of Bone Fide Wealth in New York.
Right now, there are a few players that are creating bitcoin trusts, he said, pointing to companies such as Grayscale and Osprey that help retail investors navigate cryptocurrency.
“Buying it in a fund wrapper is probably more familiar to the retail investor than anything else,” he said. In addition, working with a fund means that you deal with the company that manages the fund for any account questions or information you need, such as setting a password, tracking gains and losses, or gathering documents for filing your taxes.
And, people could also invest in funds that have exposure to cryptocurrencies and blockchain technology, such as the Ark Next Generation Internet exchange-traded fund, for example. The ETF has exposure to things such as artificial intelligence, big data, cloud computing, and blockchain.
To be sure, some investors will still want to hold digital coins on their own. More than a quarter of Americans plan to invest in cryptocurrency this year, according to a February survey of more than 30,000 people conducted by Piplsay Research. In addition, half said they think investing in cryptocurrency is safe, according to the report.
If you would like to invest directly in bitcoin or another cryptocurrency, experts recommend learning as much as possible first, only invest an amount you’re comfortable losing and holding for the long-term.
“The majority of people should be spending more time learning than buying,” Ross said, referring to cryptocurrency.
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