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Bitcoin has been the best performing asset of the decade, but you won’t find it anywhere in the public markets.
However, there are still ways to indirectly get exposure to the rising popularity of Bitcoin and other cryptocurrency technologies in the stock market.
This article will explore several investment strategies that you can use to benefit from Bitcoin’s rise in the traditional financial industry.
Bitcoin Investment Strategies
#1. Buy Bitcoin Directly
Before we discuss the indirect ways to invest in Bitcoin in the stock market, you should ask yourself if you’re comfortable owning Bitcoin directly. If yes, then consider opening an account with Gemini and buying it.
Some investors aren’t willing to enter the crypto market due to the lack of regulation in the space. If this is you, don’t worry, there are plenty of crypto opportunities in the stock market, but owning the asset directly is the best “pure play” option.
Learn More:How to Buy Bitcoin
#2. Buy a Bitcoin Trust
A bitcoin trust is a publicly-traded investment vehicle that allows investors to gain exposure to Bitcoin in the form of a security without the hassle of buying, storing, and safekeeping bitcoin directly.
Since there isn’t a Bitcoin ETF yet, this is the most popular Bitcoin play available in the stock market.
Essentially, you buy shares in a company, and they use the capital to purchase or mine more Bitcoin on your behalf.
Unfortunately, there are trade-offs to this convenience, but we’ll discuss them when we cover Grayscale Bitcoin Investment Trust (GBTC).
#3. Buy a Publicly Traded Cryptocurrency Company
There’s a wide spectrum of what can classify as a “crypto company” because some develop blockchain, some invest in it, and others simply use it.
The kind of exposure you’re seeking will influence which of these companies you choose to invest in.
There are small to nano-cap companies that strictly develop cryptosystems, like advancing mining and blockchain, and well-known large-caps that will benefit from adopting this technology.
#4. Buy a Bitcoin-Related ETF
The competition is fierce amongst publicly traded crypto companies, so it might be smart to diversify into the space by owning a bitcoin orblockchain ETF.
There are several blockchain ETFs available on the market, but the funds differ in their positioning around the technology.
Like the “crypto company” dilemma, the blockchain pure plays can differ greatly amongst the funds.
Investing in Bitcoin Stock
Ok, now let’s look at your options to “buy” Bitcoin in the stock market.
#1. Grayscale Bitcoin Trust (GBTC)
GBTCis a bitcoin trust that issues private shares to accredited investors looking to benefit from the rise of Bitcoin.
Any individual can buy shares of GBTC in the over-the-counter marketplace but will pay a premium to do so, sometimes as high as 30% above bitcoin’s net asset value.
Additionally, GBTC gains follow Bitcoin’s over a long enough period, but there will be disparities in their day-to-day movements because GBTC is a trust and not an ETF.
The Grayscale Bitcoin Trust owns 3% of all Bitcoin in circulation and is one of the better known Bitcoin Whales. Owners of GBTC pay a 2% annual expense ratio for the services provided by the kind folks at Grayscale.
#2. Bitwise 10 Crypto Index Fund (BITW)
The Bitwise 10 Crypto Index Fund seeks to track an index composed of the 10 most highly valued cryptocurrencies. It is another secure way to get diversified exposure to bitcoin and leading cryptocurrencies.
The fund has $548 million under management and is weighted by market capitalization. Let’s look at its allocations.
- Bitcoin (76.76%)
- Ethereum (16.42%)
- Litecoin (1.15%)
- Bitcoin Cash (1.07%)
- Chainlink (1.02%)
- Stellar (0.76%)
- EOS (0.31%)
- Tezos (0.27%)
- Cosmos (0.24%)
As you can see, investing in BITW will expose you to more than just Bitcoin, even though it carries most of the fund.
Similar to GBTC, BITW trades at a substantial premium to NAV that can get pretty steep. It also demands a 2.5% annual expense ratio.
#3. Blockchain ETFs
Blockchain is the underlying technology that powers Bitcoin. It was created by Bitcoin’s inventor, Satoshi Nakamoto, and some argue that it is far more important than the cryptocurrency it supports.
Blockchain technology has the potential to disrupt several industries, and its applications can be used for supply chain management, securing elections, smart contracts, better banking, and much more.
Here are the top four Blockchain ETFs:
- Amplify Transformation Data Sharing ETF (BLOK)
- Siren Nasdaq NextGen Economy ETF (BLCN)
- Capital Link NextGen Protocol ETF (KOIN)
- First Trust Indxx Innovation Transaction & Process ETF (LEGR)
Learn more:Best Blockchain ETFs
#4. Individual Companies
There are a handful of crypto mining or blockchain companies that are traded on the public markets, including Marathon Patent Group (MARA), Riot Blockchain (RIOT), and CleanSpark (CLSK).
Investing in individual companies comes with more risk than choosing an ETF, not to mention the notoriously volatile crypto arena in which these companies compete. Fortunately, you have another option if you think picking individual stocks is too risky.
You can buy shares in publicly traded holding companies that manage a diverse portfolio of early-stage investments primarily centered around blockchain infrastructure, custody, exchanges, ecosystems, and business to business software solutions.
For example, Silvergate Capital Corporation (SI) is at the epicenter of all the institutions trading various cryptocurrencies.
Additionally, Galaxy Digital Holdings Ltd. (BRPHF) trades in the OTC Markets and is one of the larger constituents in the aforementioned blockchain ETFs.
#5. General FinTech Innovation
Betting on the rise of digital assets and payment innovation is another way to invest in the idea of Bitcoin.
ARK Investment’s research suggests that US digital wallets could be valued at $800 billion by 2024, 27X the $29.5 billion today.
You can invest in ARK’s Fintech Innovation ETF (ARKF) to gain exposure to disruptive technology in the financial industry while maintaining some level of diversification.
Another option is picking the single companies leading the innovation, like Square (SQ), one of the best-performing stocks in the coronavirus era.
Square was one of the first publicly traded companies to shift some of its treasury into Bitcoin, buying $50 million worth in October 2020.
Learn more: ARK ETFs
#6. Future Crypto Exchange IPOs
Coinbase is one of the largest crypto exchanges and is scheduled to go public in March 2021. Coinbase makes money by charging several different fees, such as purchasing, trading, and transaction fees when buying and selling crypto on its platform.
Investing in Coinbase is another indirect way to bet on the rising adoption of cryptocurrencies. Mainstream adoption of crypto will require some form of regulation, and getting the SEC’s stamp of approval may curb the fears of skeptics who are hesitant to enter the space.
Gemini, the cryptocurrency exchangefounded by Cameron and Tyler Winklevoss, hinted at the idea of going public in a recent interview with Bloomberg. Gemini is one of the most regulated exchanges available and notorious for its security measures.
How to Invest in Bitcoin in the Stock Market
#1. Open an Account
Vanguard and Charles Schwab are two of the most trusted brokerage services in the industry. They are the homes to millions of investors.
Related: Best Online Stock Brokers
#2. Fund Your Account
Funding your account is simple and secure with these brokerage firms. Just connect your bank and decide how much you want to deposit.
#3. Pick Your Winners
This is the hard part, and you can go six ways from Sunday depending on your investment strategy and goals.
However, allocating a portion of your portfolio to Bitcoin is becoming more standard by the day, and even the oldest camps of asset management are on board.
Bitcoin Stock Market FAQs
Can you buy bitcoin on the stock market?
No, you cannot directly buy bitcoin in the stock market. Bitcoin is bought and sold in cryptocurrency markets.
However, investors can get indirect exposure to Bitcoin by investing in publicly traded companies building infrastructure or distribution platforms around it.
Additionally, people can invest in GBTC, which is a Bitcoin trust offered by Grayscale.
Is Bitcoin stock a good investment?
Bitcoin has shown to be a good investment since its launch in 2009, but “Bitcoin stock” doesn’t exist. The term “stock” refers to a corporation’s shares, and Bitcoin is not a company.
How do I invest in Bitcoin stock?
You cannot invest in “bitcoin stock” because bitcoin is not a corporation and therefore does not have stock. However, you can invest in Bitcoin by purchasing it on crypto exchanges, like Gemini, Coinbase, or Kraken.
Can I invest $100 in Bitcoin?
Yes, you can invest $100 in bitcoin. You do not have to purchase an entire coin. You can own as little as .00000001 of a bitcoin.
Bottom Line: How to Invest in Bitcoin Stock
There are plenty of ways to indirectly invest in Bitcoin and other cryptocurrencies in the stock market.
Although, if you’re comfortable with technology and can navigate the crypto ecosystem, just buy bitcoin and own the asset outright.
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