3 Ways To Invest in Bitcoin Without Buying Bitcoin

Ruby Layram 16th Apr 2024 No Comments

Reading Time: 5 minutes

Over the last 6 months, Bitcoin has risen by over 135% and has recently seen a new all-time high of $73,805. The bullish price movement is largely due to the upcoming halving event, which will mean there are half as many Bitcoin in circulation.

Many experts have predicted that the bull run will continue through the halving and into 2025, which has left many investors eager to add Bitcoin to their portfolios.

Investing in Bitcoin has become increasingly popular, but not everyone wants to buy and hold the cryptocurrency directly. Fortunately, there are alternative methods that allow you to invest in Bitcoin without actually owning it.

In this guide, we will explore three ways you can invest in Bitcoin without buying the cryptocurrency itself. These investments give you different benefits and levels of risk, meaning you can invest in Bitcoin’s potential without all the hassle of buying it direct

What are the benefits of investing in a Bitcoin Alternative?

3 ways to buy Bitcoin without holding the cryptocurrency

Is now a good time to invest in Bitcoin?

What Are The Benefits of Investing in a Bitcoin Alternative?

Before we dive into the best Bitcoin alternatives, let’s take a look at why you might want to consider investing in Bitcoin without actually buying it.

1. Invest with a regulated broker

Investing in Bitcoin alternatives offers several benefits. Firstly, investing in Bitcoin alternatives allows you to use a regulated brokerage, which offers a layer of protection that is not available through unregulated cryptocurrency exchanges.

Investing through a regulated brokerage provides a secure and convenient way to invest in Bitcoin without the risks associated with managing your own cryptocurrency holdings. It is also a more familiar option if you already invest in stocks and shares.

2. Diversification

Investing in Bitcoin alternatives can also help you to diversify, reducing risk and potentially increasing returns.

To ‘diversify’ means investing in a variety of assets, rather than putting all of your eggs in one basket! Investing this way can reduce risk by making sure that losses from one asset are potentially outweighed by profits from another.

3. Sustainability

Furthermore, investing in bitcoin alternatives can align with sustainable investing strategies. Bitcoin is an energy-intensive asset that uses a security mechanism called ‘Proof-of-Work (PoW). This mechanism uses more energy annually than in Norway.

Therefore, investing in Bitcoin itself may not align with sustainable goals. By investing in Bitcoin alternatives, you can avoid directly participating in harmful mining activities.

3 Ways To Buy Bitcoin Without Holding The Cryptocurrency

If you want to buy Bitcoin without holding the cryptocurrency itself, there are several options available.

Here is an overview of 3 types of assets that you could consider.

Bitcoin mining stocks

One option is to invest in Bitcoin mining stocks, which are stocks of companies involved in Bitcoin mining operations. This allows you to indirectly invest in Bitcoin’s potential without needing to buy cryptocurrencies.

By buying shares of these companies, you can gain exposure to Bitcoin’s performance while benefiting from the expertise and infrastructure of established mining operations.

Some popular Bitcoin mining stocks include Hut 8 Mining (HUT), Riot Platforms (RIOT), and CleanSpark (CLSK). You can find these stocks on regulated brokerage sites. However, none of these stocks are listed on the London Stock Exchange.

Bitcoin ETFs

Another option is to invest in Bitcoin ETFs. This is a type of exchange traded fund that allows you to gain exposure to the price movement of Bitcoin without directly buying the asset.

The first Bitcoin ETF was approved in January 2024. The funds are available to US investors only – it is not yet possible to buy Bitcoin ETFs in the UK.

Bitcoin ETFs are popular because they offer a more convenient and regulated way for traditional investors to gain exposure to Bitcoin. This means you don’t have to worry about the technicalities and complexities of storing and securing crypto. The best BTC ETFs are offered by reputable US brokerages including Fidelity, Vanek, and ARK.

Managed crypto portfolios

Lastly, you could consider investing in managed crypto portfolios. These are a basket of assets that allow you to invest in Bitcoin and other cryptocurrencies without requiring you to pick individual stocks directly.

With a managed crypto portfolio, professional fund managers handle the buying, selling, and rebalancing of the portfolio on your behalf.

This option is suitable if you prefer a hands-off approach and want to benefit from the potential of cryptocurrencies without the hassle of managing your investments directly.

This is suitable if you are new to the crypto market and may not feel confident conducting your own analysis. However, it is always a good idea to do your own research to make sure that the portfolio aligns with your long-term goals.

You can find managed crypto portfolios on platforms such as eToro and Revolut.

Is Now a Good Time To Invest in Bitcoin?

Investing in Bitcoin can be rewarding, but timing is an important factor to consider. The cryptocurrency market is known for being very unpredictable, which can present both opportunities and risks.

So, is now a good time to invest in Bitcoin?

At the time of writing, sentiment surrounding Bitcoin is positive. This is mainly due to the upcoming halving event that will reduce the number of Bitcoins that are available.

In the past, Bitcoin halving events have positively impacted the value of Bitcoin. The last halving event in May 2020 saw the value of BTC soar from $8000 to $69,000. However, past performance does not guarantee future results.

For the price of Bitcoin to continue rising, investors must continue buying it. The cryptocurrency market can be very volatile, and the value and demand for coins can fluctuate dramatically within a short period.

While some experts predict that Bitcoin will continue to thrive, others caution that the halving could lead to increased uncertainty and price swings.

Ultimately, the decision to invest in Bitcoin or not should be based on careful market research and an assessment of your investment goals. While the cryptocurrency market undoubtedly offers exciting opportunities, it should also be approached with caution.

Understanding alternative ways to invest in Bitcoin can potentially help you to make more diversified and informed investment choices. However, like any investment, it is crucial to be prepared for the volatility that comes with buying Bitcoin.

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MoneyMagpie is not a licensed financial advisor and therefore information found here including opinions, commentary, suggestions or strategies are for informational, entertainment or educational purposes only. This should not be considered as financial advice. Anyone thinking of investing should conduct their own due diligence. When investing your capital is at risk.

Cryptoassets are highly volatile and unregulated in the UK. No consumer protection. Tax on profits may apply. Don’t invest in cryptocurrency unless you’re prepared to lose all the money you invest. Cryptocurrency is a high-risk investment, and you should not expect to be protected if something goes wrong.