- Introduction
- 1. Buy stock in cryptocurrency companies
- 2. Buy stock in companies that hold a lot of crypto
- 3. Invest in companies using blockchain tech to innovate
- 4. Buy shares in publicly traded cryptocurrency funds
- The bottom line
- References
4 ways to invest in cryptocurrency stocks
- Introduction
- 1. Buy stock in cryptocurrency companies
- 2. Buy stock in companies that hold a lot of crypto
- 3. Invest in companies using blockchain tech to innovate
- 4. Buy shares in publicly traded cryptocurrency funds
- The bottom line
- References
Are you curious about cryptocurrency investing, but don’t want to own Bitcoin or any other token? What about investing in a cryptocurrency or blockchain company?
Cryptocurrency stocks are shares in publicly traded funds or companies that have significant exposure to cryptocurrency or another application of blockchain technology. If you’re familiar with the stock market and how it works, there are several ways to participate in the so-called crypto revolution without opening a cryptocurrency account.
Key Points
- Investors can get cryptocurrency exposure by owning crypto stocks and funds.
- Crypto stocks can be as diverse as the companies underlying them.
- Crypto investors should thoroughly vet every investment opportunity.
Cryptocurrency stocks vary as much as the companies underlying them, meaning that investors have plenty of investment choices. Let’s take a look at the four main ways to invest in cryptocurrency stocks and identify some of the publicly traded companies and funds that are leading the blockchain revolution.
But remember: Crypto markets have been quite volatile—pretty much from day one. The more a company’s fortunes are tied to crypto, the more volatile it will likely be.
1. Buy stock in cryptocurrency companies
One major way to gain crypto and blockchain exposure as an investor—without owning any cryptocurrency—is to invest in publicly traded companies that are directly engaged with the cryptocurrency sector. Companies that fit this description include cryptocurrency exchanges, cryptocurrency mining companies, and mining hardware manufacturers:
- Exchanges. Crypto exchanges are digital platforms that support purchases and sales of cryptocurrencies and crypto derivatives. Coinbase (COIN), which made its shares available to the public starting in 2021, is a full-on crypto exchange. Futures market behemoth CME Group (CME) lists futures and options on Bitcoin (BTC) and Ether (ETH), although these crypto products constitute less than 1% of CME volume on any given day.
- Mining companies. Cryptocurrency mining companies are enterprises that generate income from minting new cryptocurrency and operating cryptocurrency blockchains. Many crypto mining companies are publicly traded, with some of the best known including Riot Platforms (RIOT), Marathon Digital Holdings (MARA), and Hut 8 Mining (HUT).
- Mining hardware manufacturers. Cryptocurrency mining involves solving increasingly complex mathematical problems in order to collect coins and tokens. Miners need hardware—sometimes lots of hardware!—to get the job done. If you think these needs will continue to grow, you might consider investing in companies that manufacture specialized hardware for crypto miners. NVIDIA (NVDA) and Advanced Micro Devices (AMD) are two of the best-known competitors in this space.
2. Buy stock in companies that hold a lot of crypto
Some publicly traded companies in a variety of sectors—related and sometimes unrelated to cryptocurrency—own substantial portfolios of cryptocurrency on their corporate balance sheets. You could get indirect exposure to crypto by buying shares in these companies. Share prices of companies with large cryptocurrency holdings are more likely to correlate with cryptocurrency prices than those of companies that don’t hold any crypto.
Here are some publicly traded companies that own substantial cryptocurrency assets:
- Block (SQ). Formerly known as “Square,” Block is a financial technology company that enables business owners and consumers to send and receive payments. Block supports two business segments: Square and Cash App. It’s made headlines for owning—and in 2022, taking markdowns on—balance sheet cryptocurrency.
- MicroStrategy (MSTR). The enterprise analytics platform MicroStrategy has been among the most prolific corporate investors in cryptocurrency, holding 132,500 Bitcoin as of the end of 2022. MicroStrategy is arguably using balance sheet investing in Bitcoin as both a financial driver and marketing strategy.
- Tesla (TSLA). The electric automaker Tesla is another company that can provide balance sheet exposure to cryptocurrency. The company owned enough Bitcoin in 2022 to take an impairment loss of $204 million—a markdown that should highlight the volatile nature of this digital asset class.
- MassMutual (MCI). The legacy insurance company made headlines in 2020 when it added $100 million of cryptocurrency to its balance sheet. MassMutual has also invested in a cryptocurrency company as a minority investor, plus added new product lines to increase advisors’ and clients’ access to digital currency.
3. Invest in companies using blockchain tech to innovate
Another way to gain investment exposure to cryptocurrency is by owning companies that are using blockchain technology to innovate. Blockchain tech is relevant to a diverse range of use cases, with cryptocurrency being only one application of the decentralized technology.
You may be surprised to learn about the many ways that companies are leveraging blockchain tech across industries:
- Technology. It’s pretty predictable that many technology companies are using blockchain-based solutions to evolve and expand their product offerings. IBM (IBM), a legacy technology pioneer, is also at the forefront of offering blockchain-based solutions to businesses. NVIDIA, in addition to manufacturing crypto mining hardware, has developed a blockchain-based platform for the gaming industry.
- Ecommerce. Companies in the ecommerce sector are using blockchain technology to make supply chains more efficient, transparent, and secure. Amazon (AMZN) provides blockchain solutions for business clients using Amazon Web Services, while Alibaba (BABA) provides “blockchain as a service” infrastructure to support product traceability, supply chain finance, data asset sharing, and digital content ownership.
- Banking. With the rise of fintech—short for financial technology—it’s natural that many enterprises are using blockchain technology to enhance their financial services. JPMorgan Chase (JPM) is an example of a legacy financial institution that was early to recognize the potential of blockchain and has already leveraged the technology to execute cross-border trades.
4. Buy shares in publicly traded cryptocurrency funds
Many crypto funds exist in the marketplace—exchange-traded funds (ETFs) as well as mutual funds. Investors can mitigate the risk of encountering a fraudulent investment opportunity by investing only in cryptocurrency funds that are sponsored by credible institutions with proven track records.
- Exchange-traded funds. ETFs are passively managed funds that hold baskets of stocks or other liquid assets, usually organized around a theme or sector. A crypto ETF may own cryptocurrency directly, like the Fidelity Advantage Bitcoin ETF (FBTC) or the Invesco Galaxy Bitcoin ETF (BTCO), or be a portfolio of publicly traded cryptocurrency stocks, such as the Schwab Crypto Thematic ETF (STCE).
- Mutual funds. Mutual funds are professionally managed funds that are typically organized around a specific strategy or theme. A crypto mutual fund, like a crypto ETF, may hold cryptocurrency directly, invest in cryptocurrency futures contracts, or invest in publicly traded crypto stocks. Fidelity’s Bitcoin Strategy ProFund Investor Class fund (BTCFX) is an example of a mutual fund that invests in Bitcoin futures.
The bottom line
If you don’t want to buy any crypto, then don’t. Avoid the stress! Cryptocurrency and blockchain investors have plenty of alternatives to gain portfolio exposure to cryptocurrency—without directly purchasing any digital assets.
Before making a cryptocurrency stock investment—or any investment, for that matter—be sure to do your homework. Consider carefully which, if any, crypto stocks or funds fit your objectives and risk tolerance. If history is a guide, you’ll need to withstand quite a bit of risk.
Specific companies and funds are mentioned in this article for educational purposes only and not as an endorsement.
References
- Form 10-K: Tesla, Inc. | sec.gov
- Institutional Bitcoin Provider NYDIG Announces Minority Stake Purchase by MassMutual | massmutual.com