The Ultimate Guide To Investing In Bitcoin Vault

Investing in Bitcoin can be a complex process, especially when it comes to purchasing and storing digital assets. However, Vault Digital Funds offers a simple, smart, and trusted way for Kiwis to invest in Bitcoin. As a managed fund in New Zealand, Vault simplifies the process of investing in digital assets, eliminating the challenges of buying, storing, and safekeeping them directly. One of the key advantages of investing through Vault is the tax efficiency it offers. While direct investments in Bitcoin are subject to capital gains tax, investments through Vault's Portfolio Investment Entity (PIE) Fund are taxed using the Fair Dividend Rate (FDR) method, resulting in a more favourable tax treatment for New Zealand residents. Additionally, Vault's PIE fund provides exposure to offshore-listed Bitcoin managed funds and ETFs, further enhancing its appeal.

Investing in Bitcoin: Vault Digital Funds

There are several reasons why Kiwis might consider including a small amount of Bitcoin exposure in their investment portfolio:

• Diversifying their portfolio.
• Its potential as a relatively inflation-proof asset, given Bitcoin’s scarce supply.
• Its longer-term potential, given increasing adoption rates and maturing market confidence with institutional and retail investors, which suggest demand will increase over time.
• Its utility potential, where other protocols can be built on the Bitcoin blockchain.

However, it is important to remember that Bitcoin is volatile, and you should speak to a financial advisor before investing.

The Vault International Bitcoin Fund (VIBF) offers a simple, smart, and trusted way to invest in Bitcoin. Here are some of the key benefits:

• Simple: You can make your investment through trusted NZ platforms like InvestNow, without the complexity of investing directly in Bitcoin and being responsible for your own security and storage.
• Smart: VIBF is taxed in accordance with the FDR methodology, meaning the VIBF is Capital Gains Tax Free for New Zealand Residents. In contrast, when NZ taxpayers invest directly in Bitcoin, they pay tax on realised capital gains.
• Trusted: The VIBF is a registered managed investment fund in New Zealand. VIBF only invests in regulated listed overseas funds that hold their underlying Bitcoin assets in cold storage with institutional-grade security. Vault doesn’t hold your assets – these are held by a regulated NZ custodian.

Some prominent risks associated with investing in Bitcoin include:

• A limited supply of Bitcoin (maximum of 21 million) makes the price very sensitive to demand changes.
• Market dynamics, regulatory actions and changes, technical advancements, as well as broader economic and political factors.
• Bitcoin is a relatively new asset, making it difficult to value and highly sensitive to news and announcements.
• Concentrated ownership risk: Digital assets like Bitcoin may have concentrated ownership, and large sales or distributions by holders of such digital assets could adversely affect their market price.
• Government regulation risk: Globally, Bitcoin is largely unregulated, and investors receive little to no regulatory protection. The form of any future regulatory framework is uncertain, and this could have a significant impact on the value of Bitcoin.

Units in the VIBF and shares in the underlying Bitcoin Funds and ETFs are held by NZ-regulated custodian, Adminis. Vault only buys shares in Funds listed on regulated offshore exchanges, and where the Bitcoin assets of those funds are held by large institutional custody providers.

VIBF is a multi-asset fund, enabling Vault to be flexible about which assets are included in the fund, depending on the prevailing market conditions.

Units in the fund can be readily purchased and redeemed through InvestNow.

Diversifying your portfolio

Diversify Across Different Cryptocurrencies

Include a range of cryptocurrencies in your portfolio, such as Bitcoin (BTC), Ethereum (ETH), Cardano (ADA), and Chainlink (LINK). Consider allocating a larger percentage of your portfolio to the more established cryptocurrencies like Bitcoin and Ethereum, which have lower risk and higher stability. You can then allocate smaller portions to other mid and low-cap coins, which may offer higher potential returns but come with greater risk.

Diversify by Industry and Region

Consider investing in cryptocurrencies from different industries and sectors, such as decentralised finance, artificial intelligence, and gaming. By doing so, you protect your portfolio in case a particular industry takes a hit. Similarly, you can diversify by investing in crypto projects from different regions of the world.

Time Diversification

Instead of investing a large sum of money all at once, consider investing smaller amounts over time. This strategy, also known as 'dollar cost averaging', helps to reduce the risk of trying to time the market perfectly. By investing at regular intervals, you benefit from both the highs and lows of the market and lower your average cost per coin.

Diversify with Stablecoins

Stablecoins are cryptocurrencies that are pegged to fiat currencies like the US dollar, euro, or yen. They are designed to be less volatile than other cryptocurrencies, providing more stability to your portfolio. While they may not offer the same high returns as other coins, they can help to hedge against market volatility and reduce the overall risk of your crypto investments.

Diversify with Yield-Earning Tokens

Some platforms offer the opportunity to earn a yield on your crypto holdings. By investing in yield-earning tokens, you can generate passive income on your crypto assets, further diversifying your investment strategy and reducing the impact of market volatility.

Remember, there is no one-size-fits-all approach to portfolio diversification. It's important to do your own research, assess your risk tolerance, and create a strategy that aligns with your investment goals.

Inflation-proof asset

How to Invest in Bitcoin Vault

Bitcoin is currently the largest cryptocurrency by market cap and is arguably the most well-known. Its inflationary status is due to the fact that the total supply of bitcoin increases as more of it is mined. However, it is also seen as a potential inflation-proof asset due to its scarce supply.

The total supply of Bitcoin Vault is limited by its software and will never exceed 21,000,000 coins. This limited supply is similar to Bitcoin, which has a maximum supply of 21 million. This makes the price of both coins very sensitive to demand changes.

The Vault International Bitcoin Fund (VIBF) is a New Zealand-based Portfolio Investment Entity (PIE) Fund that provides investors with exposure to Bitcoin. It is a simple, smart, and trusted way for Kiwis to invest in digital assets like Bitcoin.

• It is a registered managed investment fund in New Zealand.
• It is taxed in accordance with the FDR methodology, which means it is Capital Gains Tax Free for New Zealand Residents.
• It only invests in regulated listed overseas funds that hold their underlying Bitcoin assets in cold storage with institutional-grade security.
• It is important to note that the price of Bitcoin and, as a result, the unit price of the VIBF is extremely volatile and subject to high degrees of risk.

Other Considerations

When considering investing in Bitcoin or the VIBF, it is important to keep in mind the volatile nature of the digital asset space. Bitcoin is a relatively new asset, making it difficult to value and highly sensitive to news and announcements.

Additionally, factors such as market dynamics, regulatory actions and changes, technical advancements, and broader economic and political factors can cause the price of Bitcoin to change significantly over short periods.

It is always recommended to speak to a financial advisor before investing and to only invest what you can afford to lose.

Long-term potential

Bitcoin Vault (BTCV) is a cryptocurrency that has been described as a potentially good investment option. BTCV's price has been predicted to increase in the long term, with some experts claiming that it could reach $3.58 within five years.

There are several factors that contribute to the long-term potential of Bitcoin Vault:

Diversification

Including a small amount of Bitcoin exposure in an investment portfolio can help diversify an investor's holdings. This diversification can reduce risk and improve overall portfolio performance.

Inflation-Proof Asset

Bitcoin's scarce supply (limited to 21 million) makes it a relatively inflation-proof asset. As a result, Bitcoin Vault, which is derived from Bitcoin, may also serve as a hedge against inflation.

Increasing Adoption Rates and Maturing Market Confidence

The increasing adoption of Bitcoin by institutional and retail investors suggests that demand for it will increase over time. This can positively impact the price of Bitcoin Vault, as it is derived from Bitcoin.

Utility Potential

The Bitcoin blockchain has the potential to support other protocols, which can increase the utility of Bitcoin and Bitcoin Vault. This can drive up demand and price.

Regulatory Actions

While Bitcoin is currently largely unregulated, regulatory actions and changes could have a significant impact on its value. If governments choose to regulate Bitcoin, it may become more widely accepted and gain more legitimacy as an investment option.

Technological Advancements

Technological advancements can also influence the value of Bitcoin and Bitcoin Vault. Improvements in the efficiency of the Bitcoin network, for example, may make it more sustainable and attractive to investors.

Market Dynamics and Economic Factors

Market dynamics and broader economic and political factors can cause the price of Bitcoin to fluctuate. These factors can include changes in supply and demand, as well as economic conditions such as currency and debt creation and government deficits.

It is important to note that cryptocurrency is a highly volatile and risky asset class. Before investing in Bitcoin Vault, be sure to do your own research and consult a financial advisor to understand the potential risks and rewards.

Utility potential

Investing in Bitcoin has its utility potential, where other protocols can be built on the Bitcoin blockchain. This is one of the reasons why Kiwis might consider including a small amount of Bitcoin exposure in their investment portfolio.

The Vault International Bitcoin Fund (VIBF) is a simple, smart, and trusted way for Kiwis to invest in digital assets like Bitcoin. It provides easy exposure to this dynamic and exciting new asset without the challenges of buying, storing, and safekeeping digital assets directly.

VIBF is a New Zealand-based Portfolio Investment Entity (PIE) Fund that provides investors with exposure to offshore-listed Bitcoin-managed funds and ETFs, taxed under the FDR methodology. It is a registered managed investment fund in New Zealand, investing only in regulated listed overseas funds that hold their underlying Bitcoin assets in cold storage with institutional-grade security.

VIBF is also a multi-asset fund, enabling Vault to be flexible regarding which assets are included in the fund, depending on the prevailing market conditions. Units in the fund can be readily purchased and redeemed through trusted NZ platforms like InvestNow.

However, it is important to remember that Bitcoin is a volatile asset, and investors should consider seeking advice from a financial advisor before investing.

Frequently asked questions