Bitcoin, ethereum, dogecoin… Thousands of crypto-currencies have emerged in recent years in the wake of technological advances and various conspiracy theories against the centralized capitalist system. But while these tokens have become a product of speculation, the volatility that characterizes them is not for all hearts. That's why we offer other ways to bet on the rise of these assets in a much more traditional way, without having to buy them.
Exchange-traded funds
It's taken years, but bitcoin-linked exchange-traded funds (ETFs) are now present on Wall Street. ProShares Bitcoin Strategy made its Wall Street debut a fortnight ago under the ticker BITO, collecting over $1.1 billion in investments in just two days. Valkyrie Bitcoin Strategy (ticker BTF) followed soon after.
In addition, tech investment guru Cathie Wood and her company Ark Invest applied to the regulator for approval of their own crypto-currency futures fund. Other companies have also applied for approval of their own ETFs.
Outside the US, there are other possibilities. Canada has had its own bitcoin ETF since February, and for the past month the Toronto Stock Exchange has also offered an exchange-traded fund that also includes ethereum (ticker ETC). In Europe, others include Jacobi Asset Management and Melanion Capital. What's more, while most of them work with futures contracts, others buy the crypto-currency and trade accordingly. So investors won't be short of options.
However, analysts point out that this is not yet a product for all types of investors. In this respect, they point out that the purchase of an ETF involves the payment of an annual commission (0.95% in the case of the two funds already listed), which can be a burden for those wishing to maintain their investment over the long term.
Investors wishing to hold these assets over a long period should therefore consider buying the crypto-currency outright, as even if they pay the purchase fee at that point, they will already own the asset and won't have to bear any further costs for several years.
However, owning cryptocurrencies also entails other risks, such as loss of the virtual wallet password or hacking and theft.
Investing in specialist companies
The other great way to bet on crypto-currencies is to acquire shares in companies with economic activity related to crypto-currencies or with high exposure to them.
The most obvious option is Coinbase Global, a company that made its stock market debut in April and whose business is crypto-currency exchange. Less than ten years old, it has a market capitalization of over $67 billion and, after falling in the months following its debut, is currently trading close to its starting price. Analysts give it a strong Buy recommendation and an average 12-month growth of 14% for the stock, although the most optimistic forecast growth of up to 88% in a year's time.
Robinhood also deals in crypto-currencies, although its business extends to transactions on the traditional financial market. In addition to being able to buy crypto-currencies on the platform, it has been possible to purchase its shares since its IPO in July. Although its value has barely managed to rise since then, most analysts are split between buying and holding. This split is also reflected in the 12-month price target: from a 26% fall for pessimists to a 137% rise for optimists.
Other companies, such as Square and Paypal, are in a similar situation. Another option is to buy shares in MicroStrategy or Tesla, whose business is not linked to the world of crypto-currencies, but which have bet heavily on them. The former develops software and holds bitcoins worth 7,000 million (the company's capitalization stands at 7,400), while Elon Musk's firm holds some 2,500 million in bitcoins and will again accept the purchase of vehicles in this crypto-currency (despite Musk's personal commitment to dogecoin instead).
