Planning to buy Bitcoins through safe routes? Here are your options

Bitcoins | Representative image

Amid the volatility in the crypto market in past couple of weeks, traders are in dilemma over investment in the digital coin sector. However, traders looking for a safe path to make a bet on the future of cryptocurrency.

Meanwhile, the Securities and Exchange Commission is mulling to whether to approve exchange-traded funds that track Bitcoin, as several crypto-related firms have gone public. They are even buying a plenty of Bitcoins, leading to which their shares are affected by movements in the cryptocurrency’s price.

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Let us look at alternatives from where one can buy Bitcoins:

Trough traditional stocks in a Bitcoin-related firm:

This route is considered to be an indirect exposure to Bitcoin. Earlier in April, Coinbase Global Inc.’s direct listing on the Nasdaq gave a sort of relief and assurity to the crypto coin traders who were looking out for alternatives.

"Our net revenue is substantially dependent on the prices of crypto assets and volume of transactions conducted on our platform," Bloomberg quoted Coinbase Global's filing at a Securities and Exchange Commission.

Apart from this, traders and investors can also focus on firms like Tesla that are bullish on Bitcoin and have substantial holdings. Also, firms like MicroStrategy Inc and Galaxy Digital Holdings had purchased bitcoins in millions of dollars.

“The risk-return profile is not exactly the same, as you are also taking a position in the firms themselves and therefore take on exposure to their unique risks,” the financial daily quoted Switchback Financial's Michael Kelly as saying.

Investment in technology:

Those with goods with maths, can look out for this alternative route by solving complex mathematical problems to verify transactions of the currency. Following this, the individuals may be rewarded with new Bitcoin as each unit is an encrypted record stored in a public ledger called a blockchain. Riot Blockchain Inc and Marathon Digital Holdings Inc are two of the largest firms in the sector.

“You don’t have to be a computer geek anymore to mine. There are companies who can do it for you,” senior technical analyst at Stockcharts.com Julius de Kempenaer said.

Trusts:

This alternative trading route looks safer than other routes, however there are charges involved in it. To gain indirect exposure to Bitcoin post launch of by Grayscale Investments in 2013, Grayscale Bitcoin Trust has been the go-to place.

The trust charges a 2 percent fee for its management of the fund and allows investors to hold the currency without having to create what’s known as a digital wallet.

"There’s a lot more fees associated with it. If you own Bitcoin directly, you’re not paying any fees to hold it or trading fees for humans to work,” Citrine Capital's private wealth adviser Ryan Cole said.

Exchange Traded Funds (ETFs):

With interest of investors growing in cryptocurrencies, Grayscale Investments LLC had recently said that it is mulling to turn its trust into an ETF as soon, following the regulators allow it. However, Securities and Exchange Commission is yet to approve the structure.