How to Invest in Crypto Without Buying Coins
The easiest way to get investment exposure to crypto without buying crypto itself is to purchase stock in a company with a financial stake in the future of cryptocurrency or blockchain technology.
But investing in individual stocks can bear similar risks as investing in cryptocurrency. Rather than choosing and investing in individual stocks, experts recommend investors put their money in diversified index funds or ETFs instead, with their proven record of long-term growth in value.
“Believe it or not, most individuals with a retirement plan or an investment portfolio allocated in an index fund already have some exposure to crypto,” says Daniel Johnson, a CFP with ReFocus Financial Planning.
Many of the best index funds — like S&P 500 or total market funds — include publicly traded companies that have some involvement with the industry by either mining crypto, being involved in the development of blockchain technology, or holding significant amounts of crypto on their balance sheets, says Johnson.
For example, Tesla — which holds over a billion dollars in Bitcoin and accepted Bitcoin payments in the past — is included in any funds that track the S&P 500. Since its 2020 inclusion, it’s become one of the most valuable, and therefore influential companies in the index. And Coinbase, the only publicly traded cryptocurrency exchange, is in the ARK Fintech Innovation ETF.
However, if you have some extra cash (and you’re tolerant of the risk), you can choose to allocate a small amount of your portfolio to specific companies or more specialized index funds or mutual funds. “An investor bullish on the future of cryptocurrency could invest in the stocks of companies working on that technology,” says Jeremy Schneider, the personal finance expert behind Personal Finance Club.
Experts generally recommend keeping these speculative investments — whether a single company’s stock, specialized index funds, or cryptocurrency itself — to less than 5% of your total investing portfolio.