The Best Places To Invest Your Cryptocurrency

Investing in cryptocurrency is risky, but it can be done through crypto exchanges or apps, or via certain broker-dealers. The most popular places to purchase cryptocurrency are cryptocurrency exchanges such as Coinbase, GDAX, and Bitfinex. These exchanges allow you to purchase currencies like Bitcoin and Ethereum with a debit card. You can also buy crypto via brokers like Robinhood and SoFi, which take the complexity out of purchasing crypto by offering easy-to-use interfaces. However, brokers may restrict you from moving your cryptocurrency holdings off their platform.

Crypto exchanges

Some of the most well-known crypto exchanges are Coinbase, Gemini, Binance, Kraken, and Bitfinex. While these companies' standard trading interfaces may overwhelm beginners, they also offer user-friendly easy purchase options. However, the convenience of these options comes at a cost, as they charge substantially more than it would cost to buy the same crypto via each platform's standard trading interface.

When choosing a crypto exchange, it is important to ensure that it allows fiat currency transfers and purchases made with US dollars. Some exchanges only allow you to buy crypto using another crypto, meaning you would have to find another exchange to buy the tokens accepted by your preferred exchange before you could start trading.

It is also worth noting that crypto exchanges are not backed by protections like the Federal Deposit Insurance Corporation (FDIC) and are at risk of theft or hacking. Therefore, it is crucial to choose a reputable and well-known exchange and carefully consider the security of your cryptocurrency wallet.

Crypto brokers

When choosing a crypto broker, it is important to consider factors such as security, reputation, fees, user interface, customer support, and regulation. Some popular crypto brokers include:

• EToro: eToro is often regarded as one of the best crypto brokers due to its social trading platform, wide range of cryptocurrencies, user-friendly interface, and regulatory compliance.
• Coinbase: Coinbase is a well-known and trusted crypto broker, serving over 100 million users. It offers strong security measures, a user-friendly interface, and the ability to trade more than 200 cryptos.
• Swissquote: Swissquote is a Swiss bank regulated by the Swiss Financial Market Supervisory Authority (FINMA), providing high levels of investor protection and trust. It offers a range of popular cryptocurrencies and advanced trading platforms.
• Interactive Brokers: Interactive Brokers is a good choice for active crypto traders as it charges no added spreads, markups, or custody fees. It offers low commissions and a diverse range of asset classes.
• AvaTrade: AvaTrade offers a diverse range of copy-trading options, a user-friendly interface, transparency, and strong security measures. It caters to both beginner and experienced traders.
• Caleb & Brown: Caleb & Brown is a good choice for beginners as it offers personalised support and a dedicated broker to help build a crypto portfolio. It facilitates large transactions and provides instant information on spot prices.

Crypto wallets

Hot Wallets

Hot wallets are digital tools whose connection to the internet cannot be severed. They are often available as a standalone product or as an add-on through popular crypto exchanges. Hot wallets are more susceptible to hacks but provide faster transactions. Examples of hot wallets include:

• Coinbase Wallet Web3
• MetaMask Crypto Wallet
• Crypto.com DeFi Wallet
• Exodus Crypto Wallet
• Gemini Crypto Wallet

Cold Wallets

Cold wallets store your digital keys offline on a piece of hardware or sheet of paper. Hardware wallets usually come in the form of a USB drive, while "paper" wallets may have your keys accessible via print-out QR codes, written on a piece of paper, or engraved on some other material. Cold wallets are more secure than hot wallets but transactions take longer on average. Examples of cold wallets include:

• Ledger Nano S Plus
• SafePal
• KeepKey
• Ellipal Titan Crypto Wallet

Crypto funds

Publicly traded funds (mutual funds) are listed on public exchanges and are typically used alongside a strategy of buying and holding cryptos for the long term. They can only be purchased at the end of the trading day and are managed by an expert who makes decisions about how the fund's assets are distributed. Some concentrate on just one major crypto, such as Bitcoin or Ethereum, while others offer exposure to multiple currencies. Management fees of around 1% to 2.5% usually apply.

Exchange-traded funds (ETFs) are similar to mutual funds in that they are both listed on exchanges and comprise a long-term strategy of incremental gains. While mutual funds' indexes are actively managed, ETFs are passive and usually track the price of an asset (like Bitcoin) or a "basket" of assets (top cryptocurrencies by market cap). ETFs also include investment types such as "grantor trusts", which usually only track the price of a single commodity (such as GBTC). As of 2021, no Bitcoin ETFs exist on major American stock exchanges due to regulatory restrictions.

Private buy-and-hold funds are not listed on any exchanges and usually have eligibility criteria – for example, only those with $50,000 capital or more can join. However, similar to public funds, they typically adopt a buy-and-hold approach and charge an annual management fee.

Cryptocurrency hedge funds adopt complicated alternative investment strategies, aiming to provide returns to members in both rising and falling markets. For example, they might take advantage of cryptocurrency arbitrage opportunities, trade on leverage, or use complicated trading algorithms. Hedge funds usually try to outperform a specific benchmark, such as a market index, and if they exceed the benchmark, they charge performance fees of 15%, 25%, or even higher.

There are several benefits to investing in crypto funds, including expert management, avoiding the confusion of buying and storing cryptocurrencies, diversifying your portfolio, and increased buying power. However, there are also risks associated with investing in crypto funds, including loss of control, fees, volatility, and regulatory uncertainty.

Crypto IRAs

When choosing a Crypto IRA provider, it is essential to consider security, fees, the range of cryptocurrencies supported, and the ease of use. Here are some of the top Crypto IRA providers in the market:

ITrustCapital

ITrustCapital is a leading Crypto IRA platform that offers low fees, a simple account setup process, and excellent customer service. They allow users to invest in over 30 cryptocurrencies, gold, and silver. iTrustCapital charges a 1% transaction fee with a minimum account balance of $1,000, making it an attractive option for cost-conscious investors.

Bitcoin IRA

Bitcoin IRA is a full-service Crypto IRA provider, offering 24/7 trading, secure cold storage for digital assets, and insurance protection. They support over 60 types of cryptocurrencies and have higher fees compared to some other providers. The minimum account balance for a standard account is $3,000, but they also offer a Saver IRA with a lower initial deposit.

BitIRA

BitIRA stands out for its robust security measures, offering end-to-end insurance coverage and offline cold storage of private keys. They support over 15 cryptocurrencies and have a minimum investment amount of $5,000. While they do not disclose their fees on the website, they are known for having relatively low fees.

Equity Trust

Equity Trust is a well-established company with over 40 years of experience in self-directed IRAs. They support traditional and alternative investments, including cryptocurrencies, with no transaction fees. Equity Trust offers guidance from SDIRA specialists and educational tools to help investors make informed decisions. Their annual administration fees range from $225 to $2,250, depending on the account size.

Coin IRA

Coin IRA provides educational resources to help investors understand the process of establishing and funding Crypto IRAs. They offer low fees, with no account setup, annual, or monthly maintenance fees. Coin IRA supports investment in Bitcoin, Ethereum, Litecoin, and more, with a minimum investment of $5,000.

When considering a Crypto IRA, it is important to remember that they come with certain drawbacks and risks. These accounts have contribution limits, income limits on contributions, and early withdrawal penalties. Additionally, the volatility of the cryptocurrency market means that investors could face significant losses if they are not careful.

Frequently asked questions