Experts Explain How To Invest In Cryptocurrency

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Damir Mujezinovic

The term cryptocurrency is used to describe any type of decentralized digital money designed to be used over the internet. As digital assets, cryptocurrencies are not controlled by governments or other central bodies, which makes them appealing to many investors.

Invented in 2008, Bitcoin is by far the best known cryptocurrency, but many other similar currencies have been created since its release.

So how would one go about investing in cryptocurrency? More importantly, is crypto a good and safe investment?

Here's what experts have to say.

Investing In Crypto

Even for some experienced investors, cryptocurrency is unfamiliar territory, so it's no wonder many are still hesitant to take the plunge and invest.

According to president of Bone Fide Wealth Douglas Boneparth, there are ways to invest in crypto without actually buying it. In other words, cautions investors can put money in a company that owns crypto, as opposed to purchasing crypto directly.

"When you’re thinking about investing in a company because they have exposure to crypto, it really runs the gamut from how direct or indirect you are in terms of that exposure. It just depends on how much of their balance sheet is in crypto," Boneparth explained to The Detroit News.


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Minimizing Risk

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Another way to minimize risk is to invest in companies that have a stake in the cryptocurrency industry itself -- like Coinbase, which is publicly traded platform where investors can buy and sell cryptocurrency, according to Boneparth.

"Just like you have with gold, you can either invest in the commodity itself or the infrastructure around it, the miners, the materials needed for mining, same with energy and oil. And there are public companies that are specifically operating in the blockchain space, but there’s not many of them."

What About ETFs?

Per Investopedia, an exchange traded fund (ETF) is "a type of security that tracks an index, sector, commodity, or other asset, but which can be purchased or sold on a stock exchange the same way a regular stock can."

No ETFs have yet been approved by the Securities and Exchange Commission (SEC), but that is more than likely to change in the future, according to Tristan Yver, the head of strategy at FTX.US.

"I don’t have an estimate of when this will occur, but I do think it’s something that will happen, and I think it’s something that will allow people who aren’t comfortable with investing directly in digital assets to get exposure to bitcoin and other cryptocurrencies," Yver explained.

Bitcoin-Backed Futures ETF

SEC Chairman Gary Gensler is in favor of creating a bitcoin-backed futures ETF and rumors that the SEC is looking to approve the first bitcoin futures exchange-traded funds have done wonders for Bitcoin, according to MarketWatch.

Last week, Bitcoin rose 12.7 percent from the previous week as of Friday. By Wednesday, it recorded a staggering seven-day gain of 33.5 percent.

"Now, after consolidating for a long time in the $40K range, Bitcoin seems much better prepared for another big move upward. If that happens, Bitcoin will likely go on to test its ATH (all-time high) and there’s a high probability it will break it," said Anto Paroian, chief operating officer at crypto hedge fund ARK36.