Top 7 Ways to Invest in Bitcoin in 2022

Bitcoin has arguably become one of the most exciting asset classes of our time. As a result, several financial products have been developed to help retail and institutional investors benefit from the upside price potential of the world’s leading digital currency.

Regardless of whether you are in the US, South Africa or China, you can invest in bitcoin using at least one of the below-listed bitcoin investment opportunities.

Buy and Hold Bitcoin

Buying bitcoin means exchanging your fiat money – euros, dollars, and others – for bitcoin. Many people use this strategy to invest in bitcoin. This works by buying bitcoin on a bitcoin exchange and storing it in your bitcoin wallet.

There is a wide range of cryptocurrency exchanges and bitcoin trading apps you can choose from to purchase bitcoin. Depending on your location and desired payment method, there will be an option for you to make your first bitcoin investment.

Buy Bitcoin CFDs

Bitcoin CFDs (Contract for Difference) allows you to place a bet on the rising or falling prices of bitcoin. Traders can speculate on the rate of bitcoin without actually owning the asset. In this case, you enter into a contract with your broker, you gain or lose money based on the difference between the opening and closing prices of the trade.

Let’s say you believe the price of bitcoin will rise at some point in time in the future. If the price goes up, you win with the same percentage as the price went up. However, if bitcoin goes down, you lose at the same rate.

The value-adding prospect of using CFDs to trade bitcoin is that you can use leverage to increase your potential profits. However, that also increases risk. Hence, it is advisable to always use a stop-loss limit when trading CFDs to avoid large losses.

To start with trading Bitcoin CFDs, you need a CFD broker that provides access to bitcoin contracts. Popular bitcoin CFD brokers include eToro and FXCM.

Buy a Bitcoin ETN

Exchange-traded notes are unsecured debt notes issued by a financial institution. A Bitcoin ETN can be purchased by investors who prefer to hold an exchange-traded, regulated financial security that has bitcoin as an underlying as opposed to holding bitcoin directly.

Sweden’s XBT Provider AB has been offering two bitcoin-based ETNs (Bitcoin Tracker One and Bitcoin Tracker EUR) since 2015 and 2017, respectively. They launched a dollar-denominated ETN in 2018. That means U.S. investors or investors who have a dollar account can also buy and sell the BTC ETN.

To invest, you need an account with an online broker that has access to the Nasdaq Stockholm exchange, where the Bitcoin ETNS trade.

Invest in Bitcoin Stocks

To benefit from the potential future success of bitcoin without owning the asset directly, you could also invest in bitcoin stocks.

There are public companies like Square, which enables users to buy and sell bitcoin using its mobile payments app. Or companies like Northern Bitcoin and HIVE, who are involved in bitcoin mining.

Other public companies include Microsoft, Overstock, and AMD. Microsoft seeks to build a ‘Blockchain-as-a-Service’ on its Azure cloud. Overstock is a US-based online retailer that accepts bitcoin payments. Advanced Micro Devices (AMD) produces graphics cards used to mine ASIC-resistant digital currencies.

Buy Bitcoin Certificates

Another exciting bitcoin investment vehicle is the exchange-traded bitcoin certificates. This investment product helps retail investors to gain exposure to bitcoin without actually buying the digital currency outright.

Popular certificates include Vontobel’s Open-Ended Participation Certificate on Bitcoin, Leonteq’s Tracker Certificate on Bitcoin and Swissquote’s Active Bitcoin Certificate.

Swissquote’s Active Bitcoin Certificate portfolio is composed of at least 60 percent bitcoin with the balance left in dollars – the fiat currency serves as a volatility buffer. Leonteq’s Tracker Certificate on Bitcoin can be bought with USD, EUR or CHF while Vontobel’s Participation Certificate on Bitcoin is denominated in Euros.

Bitcoin certificates are a viable investment option for private investors who do not want to go through the technical process of buying and storing bitcoin.

Buy Bitcoin Futures

A further way to profit without directly buying the asset is through bitcoin futures. Futures are financial derivative contracts traded on an exchange. The Chicago Mercantile Exchange (CME) and the Chicago Board Options Exchange (CBOE) are currently the platforms that list bitcoin futures. Those two are established financial derivatives exchanges.

Futures involve placing a bet on the future price of an asset, such as bitcoin. Two parties agree to buy or sell bitcoin at a particular price in a predefined time in the future. When the bitcoin futures contract executes, the parties must buy/sell at the previously agreed price.

Bitcoin futures are primarily for institutions and professional traders. You need an online broker providing access to CME or CBOE. However, the last currently traded bitcoin futures on CBOE expired in June, and there has not been an announcement for new futures to get listed.

Buy Shares in the Bitcoin Investment Trust

Finally, you could also look at investing in Grayscale Investments’ Bitcoin Investment Trust. The Bitcoin Trust trades over-the-counter and has been around since 2013. When you buy shares in the trust, you own a fraction of the bitcoin held.

The performance of the fund is in relation to the price performance of bitcoin. Demand and supply for the fund itself is also a driving factor of the value of its shares. Grayscale Investments require a minimum investment of $50,000 and charge an annual fee of two percent.

If you want to start investing in bitcoin, check out our guide to the best bitcoin trading platforms that you can use to buy bitcoin in 2019.

Disclaimer: This is not investment advice. Cryptocurrencies like bitcoin are high-risk investments. Consult your investment advisor and/or conduct thorough research before investing in digital assets.