The Ultimate Guide To Investing Bitcoin With Fidelity

Investing in Bitcoin with Fidelity is a seamless process that involves setting up a Fidelity account, linking a bank account or card, and accessing the designated Bitcoin wallet. Founded in 1946, Fidelity has established itself as a trusted name in the financial industry, known for its commitment to innovation and customer service. With its user-friendly platform and robust security measures, it has become a top choice for those interested in entering the cryptocurrency market. Bitcoin's popularity can be attributed to its decentralized nature, which sets it apart from traditional currencies and offers users a sense of autonomy and security. Fidelity's involvement has helped instill trust and legitimacy among investors, leading to a growing interest in this digital asset.

Opening a Fidelity Crypto® account

Step 1: Eligibility Requirements

Before opening a Fidelity Crypto® account, it's important to ensure you meet the eligibility requirements. You must be a US citizen over the age of 18 and reside in a state where Fidelity Digital Assets℠ serves customers.

Step 2: Navigate to the Fidelity Website or Mobile App

Visit the Fidelity website or download the Fidelity mobile app on your device. Look for the "Open an Account" button and click on it to initiate the account creation process.

Step 3: Provide Personal Information

Follow the on-screen instructions to provide your personal information, such as your full name, address, and contact details. This information is necessary to verify your identity and set up your account.

Step 4: Choose the Type of Investment Account

Select the type of investment account that aligns with your financial goals. You can choose between an individual brokerage account or a retirement account, depending on your preferences and investment strategies.

Step 5: Explore Digital Asset Preferences

After setting up the account, take some time to explore the digital asset preferences section. Here, you can customize your investment portfolio by selecting stocks, ETFs, mutual funds, and other investment options offered by Fidelity.

Step 6: Link a Brokerage Account (Optional)

Consider linking a brokerage account to access advanced trading tools and research capabilities offered by Fidelity. This step is optional but can provide you with additional resources for managing your investments.

Step 7: Link Your Bank Account

To facilitate seamless transactions and deposits for cryptocurrency purchases, you'll need to link your preferred bank account to your Fidelity platform. This will allow you to use various payment methods, including bank transfers and debit card transactions, for funding your cryptocurrency investments.

Step 8: Transfer Funds to Your Fidelity Account

Once your bank account is linked, transfer funds to your Fidelity account to enable Bitcoin transactions within specified limits while ensuring robust security measures. You can use mechanisms such as bank transfers, wire transfers, or electronic funds transfers (EFTs) for this step.

Step 9: Navigate to the 'Bitcoin Investment Trust' Page

Accessing the 'Bitcoin Investment Trust' page on the Fidelity platform is crucial to explore various Bitcoin investment options. Here, you'll find ETFs that track Bitcoin's performance, index funds that provide exposure to a diversified portfolio of digital assets, and trust structures that allow you to entrust your Bitcoin holdings to professionals for secure and reliable management.

Step 10: Place Your Order to Buy Bitcoin

The final step is to place your order for Bitcoin through the Fidelity platform. Consider the applicable fees, review the transaction details carefully, and utilize any available calculators to make optimized investment decisions. Double-check all transaction details for accuracy, and take advantage of the user-friendly interface to monitor the market, place orders, and track your investment performance.

By following these steps, you can successfully open a Fidelity Crypto® account and start investing in cryptocurrencies like Bitcoin. Remember to stay informed about the risks and volatility associated with cryptocurrency investments and always invest within your risk tolerance.

Buying Bitcoin outright

The most straightforward way to gain exposure to cryptocurrency is by investing directly in the coins you're interested in. This is most commonly done via a traditional investment platform or crypto exchange.

There are some unique aspects to this strategy. For example, buying crypto outright gives you exposure to the industry in as little as minutes. Entering an order on a traditional investment platform or an exchange can also provide hands-on experience of the buying process, which can be useful for better understanding how crypto works.

Buying crypto outright may give you complete custody over your coins, allowing you to transfer them between wallets (i.e. personal crypto accounts). This may make it easier to understand how blockchain technology works. And because the markets are open 7 days a week, there's more flexibility to decide when you want to invest compared to traditional assets like stocks and ETFs.

However, there are also risks to be aware of. Before buying crypto outright, consider learning the basics of crypto cybersecurity first. Like any digital asset, crypto is vulnerable to online theft. Transferring coins is also a multi-step process where even small errors could mean losing access to your investments forever. And remember, crypto is highly volatile, and there's a possibility that the value of any cryptocurrency can drop to zero.

Fidelity Crypto®

Fidelity Crypto® is a service offered by Fidelity Digital Assets. It allows you to trade and secure crypto like bitcoin and ethereum for as little as $1. You'll get institution-level security and services that Fidelity Digital Assets has offered since 2018.

To start trading, you'll need to open a Fidelity Crypto® account and an eligible Fidelity brokerage account to fund your crypto account. You can open an account in just a few minutes.

Fidelity Crypto® is only available to US citizens over the age of 18 who reside in a state where Fidelity Digital Assets serves customers.

Buying crypto ETPs or ETFs

There are two ways to gain exposure to the crypto industry through funds: buying crypto exchange-traded products (ETPs) or crypto-related exchange-traded funds (ETFs).

Crypto Exchange-Traded Products (ETPs)

Crypto ETPs give you direct exposure to a cryptocurrency's value without needing to buy the coin yourself. They can be bought through traditional routes like brokerage accounts, IRAs, and trusts, making tax and estate planning potentially simpler than buying crypto directly. However, ETPs don't give you direct ownership of the cryptocurrency and can come with unique trading limitations and investment risks. For example, ETPs can only be traded during traditional market hours, meaning holders have to wait until the market opens to enter or exit any positions.

Crypto-Related Exchange-Traded Funds (ETFs)

Broadly speaking, there are two types of crypto-related ETFs: stock-based ETFs and futures-based ETFs. Stock-based ETFs give you exposure to a diversified basket of cryptocurrency stocks (i.e., the stocks of companies that operate in the crypto industry). Futures-based ETFs give you exposure to the futures of either a specific cryptocurrency or a basket of cryptocurrencies. ETFs that track the broader crypto industry may offer less volatility compared to buying individual cryptocurrencies. Like ETPs, ETFs don't give you ownership of actual cryptocurrencies, which means they can't be used to pay for goods and services.

Buying crypto stocks

Investing in crypto stocks is one of the three main ways retail investors can gain exposure to the crypto market. Crypto stocks allow investors to bet on which companies will lead the industry. Examples include crypto exchanges, bitcoin mining companies, and banks that provide solutions for crypto companies.

While buying crypto on an exchange incurs trading fees, most major brokerages allow you to trade stocks without fees (though they may still charge a spread). However, inexperienced investors should be aware that this strategy has its risks. Crypto's inherent volatility, poor earnings reports, negative industry trends, and other factors can all cause a stock's value to plummet.

For example, if you're interested in investing in Bitcoin through Fidelity, you'll need to set up a Fidelity account and link your bank account. You can then transfer funds to your Fidelity account and navigate to the 'Bitcoin Investment Trust' page to explore various investment options, including ETFs, index funds, and trust-based instruments. Finally, you can place your order to buy Bitcoin through the platform, considering any applicable fees and conducting a review of the transaction details.

It's important to note that investing in crypto carries inherent risks related to market volatility, regulatory changes, and the speculative nature of cryptocurrencies. As such, investors should consider diversifying their portfolios across different asset classes to spread out risk and minimize potential losses.

Using a hardware wallet

• Security: Hardware wallets keep your private keys offline, protecting them from online attacks. This gives you full control over your funds and enhances the security of your Bitcoin.
• Peace of Mind: With a hardware wallet, you can rest assured that your crypto assets are safe from hackers, malware, and other threats. Even if you misplace or lose your device, you can recover your funds using a backup or Secret Recovery Phrase.
• Anonymity: Hardware wallets do not expose your personal data, ensuring your information remains anonymous and secure.
• Ease of Use: Setting up and using a hardware wallet is simple and does not require any prior experience.
• Flexibility: Hardware wallets support a wide range of cryptocurrencies and tokens, giving you the flexibility to manage multiple assets.
• True Ownership: With a hardware wallet, you own 100% of your coins. Unlike exchanges or custodial wallets, no third party can freeze or take away your funds.

When choosing a hardware wallet, consider reputable options like Trezor or Ledger. These providers offer user-friendly interfaces, robust security features, and comprehensive customer support. Remember to always do your research and select a hardware wallet that best suits your needs and security requirements.

Frequently asked questions