Strategies For Investing In Cryptocurrency Without Any Money

Investing in cryptocurrency is notoriously volatile, complicated, and expensive. However, there are ways to invest in cryptocurrency without buying it directly. One way is to invest in companies with cryptocurrency holdings, such as Tesla and MicroStrategy, which have added bitcoin to their balance sheets. Another way is to invest in cryptocurrency infrastructure, such as Coinbase, a platform that allows investors to buy and sell cryptocurrency. Additionally, investors can look into cryptocurrency ETFs, such as the bitcoin ETF launched by ProShares, which is based on futures contracts tied to the cryptocurrency. For those who want to invest in cryptocurrency without using their own money, some credit cards offer cryptocurrency rewards, allowing users to accumulate cryptocurrency without spending their own funds. Finally, for those who want to be directly involved in the cryptocurrency ecosystem, there are options to earn bitcoin by freelancing, selling goods and services, or creating online content.

Invest in crypto ETFs

Exchange-traded funds (ETFs) are a type of security that tracks an underlying asset, such as a stock index or a commodity. ETFs can be a great way to invest in cryptocurrency without actually buying any coins or tokens.

There are a few different types of crypto ETFs to consider:

Blockchain ETFs

Blockchain ETFs invest in companies that are involved in the development and use of blockchain technology. Blockchain is the decentralised digital ledger technology that underpins cryptocurrencies. Blockchain ETFs do not invest directly in cryptocurrencies and therefore avoid the risks associated with the volatile crypto market. Examples of blockchain ETFs include:

• First Trust Indxx Innovative Transaction & Process ETF (LEGR)
• Siren Nasdaq NexGen Economy ETF (BLCN)
• Amplify Transformational Data Sharing ETF (BLOK)

Cryptocurrency ETFs

Cryptocurrency ETFs track the price behaviour of a basket of top cryptocurrencies, such as Bitcoin and Ether. These ETFs offer direct investment in the core digital assets, providing more control and accessibility for investors. However, it is important to note that cryptocurrency ETFs are subject to the volatility of the crypto market and are therefore considered high-risk. Currently, there are only a small number of crypto ETFs available, and none have been approved by US regulators.

Leveraged Cryptocurrency ETFs

Leveraged crypto ETFs use underlying tokens of mainstream cryptocurrencies, mainly Bitcoin, to amplify returns. For example, a 3x Long Bitcoin ETF can give a 30% return if Bitcoin goes up by 10% in one day. It is important to note that leveraged ETFs are designed for short-term holdings, even in the case of crypto ETFs due to the volatile nature of the asset.

While investing in crypto ETFs can be a great way to gain exposure to the cryptocurrency market without directly purchasing coins, it is important to carefully consider the risks involved and conduct thorough research before investing.

Buy Bitcoin spot ETFs, Bitcoin Trusts, or ETPs

A spot Bitcoin exchange-traded fund (ETF) is an investment vehicle that allows ordinary investors to gain exposure to Bitcoin's price movements. In January 2024, the Securities and Exchange Commission (SEC) approved the first 11 spot Bitcoin ETFs, marking a significant shift in how regulators treat cryptocurrencies. These ETFs provide a more accessible and regulated avenue for investors to tap into Bitcoin's price action.

Spot Bitcoin ETFs are exchange-traded products (ETPs) that hold actual Bitcoins in secure digital vaults managed by registered custodians. The ETF purchases Bitcoins from other holders or authorised cryptocurrency exchanges, and then issues shares corresponding to the number of Bitcoins it holds. These shares are available on traditional stock exchanges, with their prices generally reflecting the prevailing market price of Bitcoin.

One of the key advantages of spot Bitcoin ETFs is their convenience. They lower the barriers to entry into the crypto market by eliminating the need for investors to manage wallets, navigate crypto exchanges, or deal with private and public keys. This makes asset management more straightforward, especially for those accustomed to traditional investments.

Additionally, spot Bitcoin ETFs provide enhanced liquidity, making it easier to buy and sell Bitcoins through familiar brokerage accounts. This mirrors the process of trading traditional stocks or ETFs, making it a seamless transition for mainstream investors. Furthermore, spot Bitcoin ETFs are subject to regulatory oversight, offering investors greater transparency and protection.

It's important to note that spot Bitcoin ETFs may have higher expenses than other funds due to the costs associated with securing and trading cryptocurrencies. Investors should also be aware of the risks involved, including market volatility, regulatory uncertainty, and security risks.

• ARK 21Shares Bitcoin ETF (ARKB)
• Bitwise Bitcoin ETF (BITB)
• Fidelity Wise Origin Bitcoin Trust (FBTC)
• Franklin Bitcoin ETF (EZBC)
• Grayscale Bitcoin Trust (GBTC)
• Hashdex Bitcoin ETF (DEFI)
• Invesco Galaxy Bitcoin ETF (BTCO)
• IShares Bitcoin Trust (IBIT)
• Valkyrie Bitcoin Fund (BRRR)
• VanEck Bitcoin Trust (HODL)
• WisdomTree Bitcoin Fund (BTCW)

Invest in crypto and blockchain stocks

There are several ways to invest in crypto and blockchain stocks without directly purchasing any cryptocurrencies. Here are some options:

Invest in Cryptocurrency Companies:

You can buy stocks in companies that are directly engaged with the cryptocurrency sector. This includes cryptocurrency exchanges, mining companies, and hardware manufacturers. Examples include Coinbase (COIN), CME Group (CME), Riot Platforms (RIOT), Marathon Digital Holdings (MARA), and Advanced Micro Devices (AMD).

Buy Stock in Companies Holding Crypto:

Some publicly traded companies across various sectors hold substantial portfolios of cryptocurrency. By investing in these companies, you can gain indirect exposure to crypto. Examples include Block (SQ), formerly known as Square, MicroStrategy (MSTR), Tesla (TSLA), and MassMutual (MCI).

Invest in Companies Using Blockchain Technology:

Blockchain technology has applications beyond cryptocurrency, and many companies are using it to innovate in various industries. You can invest in these companies to gain exposure to blockchain technology. For instance, IBM (IBM) and NVIDIA (NVDA) are offering blockchain-based solutions, while Amazon (AMZN) and Alibaba (BABA) are using blockchain to improve supply chain efficiency and security.

Buy Shares in Publicly Traded Cryptocurrency Funds:

You can invest in cryptocurrency funds, such as exchange-traded funds (ETFs) and mutual funds, that are sponsored by credible institutions. Examples of crypto ETFs include the Fidelity Advantage Bitcoin ETF (FBTC) and the Invesco Galaxy Bitcoin ETF (BTCO). A crypto mutual fund, like Fidelity's Bitcoin Strategy ProFund Investor Class fund (BTCFX), invests in Bitcoin futures.

Remember to thoroughly research and understand the risks associated with any investment opportunity before making a decision.

Add Bitcoin to your 401(k)

Investing in Bitcoin or other cryptocurrencies through your 401(k) is possible, but it depends on your plan provider. Many plan managers are sceptical about the value of crypto and are concerned about the risks it entails.

If your 401(k) doesn't offer cryptocurrency as an investment option, you may be able to do so through an individual retirement account (IRA).

Understand the Risks

It is important to understand the risks involved in investing in Bitcoin or other cryptocurrencies. Cryptocurrency is a highly volatile and risky investment. It is subject to significant price fluctuations and is not backed by any government or financial institution.

Develop an Investment Thesis

Before allocating funds to Bitcoin in your 401(k), it is essential to determine why you want to make such an investment. Allocating funds solely based on the expectation of price increases may not be the best decision. Instead, consider how Bitcoin fits into your overall investment strategy and develop a plan for managing your portfolio.

Be Mindful of Portfolio Risk and Volatility

Bitcoin is an incredibly volatile asset, and its value can fluctuate significantly. If left unmanaged, it may grow to a large position in your portfolio, increasing overall risk and volatility. It is important to regularly rebalance your portfolio to maintain your target asset allocation.

Consider a Self-Directed IRA (SDIRA)

If your 401(k) does not offer cryptocurrency investment options, you may want to consider rolling over your 401(k) into a self-directed IRA. With an SDIRA, you have more control over your investments and can invest in a wider range of assets, including Bitcoin and other cryptocurrencies.

Choose a Reputable Company

When selecting a company to open your crypto IRA, ensure they are regulated and licensed. Research different companies, compare their offerings, and look out for scams and fraudulent activities. It is essential to vet them thoroughly to ensure they are legitimate and compliant with applicable regulations.

Understand the Fees Involved

When investing in cryptocurrency through an IRA, be aware of the various fees involved. These may include blockchain and exchange transaction fees, annual fees, trading fees, and key storage fees. These fees can impact your overall returns, so it is important to factor them into your investment decisions.

Consult a Financial Advisor

Before initiating any cryptocurrency investment actions, it is highly recommended to consult a financial advisor or a reputable retirement planner. They can help you evaluate if investing in cryptocurrency is suitable for your financial circumstances and goals.

Final Thoughts

While adding Bitcoin to your 401(k) can provide diversification and growth potential, it is essential to approach it with caution. Cryptocurrency is a highly speculative and volatile asset class. Therefore, it should only be a small part of your overall retirement portfolio, especially if you are risk-averse or nearing retirement age.

Use a credit card with crypto rewards

Using a credit card with crypto rewards is one way to invest in cryptocurrency without using funds. This method allows you to earn crypto through your regular spending.

The first step is to find a credit card that offers crypto rewards. Crypto credit cards are usually issued in partnership with platforms that allow users to buy and sell cryptocurrency, so you may need to open an account with one of these platforms. Some popular options include the Gemini Credit Card, the Crypto.com Visa Card, and the Venmo Credit Card.

Once you have a crypto credit card, you can use it for your regular purchases and earn crypto rewards. The rewards rate will vary depending on the card, with some offering a flat rate and others providing higher rates in bonus categories. It's important to note that crypto rewards can fluctuate in value, so there is a risk of losing money.

Additionally, there may be fees associated with crypto credit cards, such as foreign transaction fees or cryptocurrency sales fees. It's important to carefully review the terms and conditions of the card before applying.

Overall, using a credit card with crypto rewards can be a convenient way to invest in cryptocurrency without using your own funds. However, it's important to carefully consider the risks and potential fees involved.

Frequently asked questions