confused about crypto? invest in proxies
almost everyone has heard of bitcoin by now. even if you don’t know the story behind the world’s first cryptocurrency, you’ve definitely heard how it has rallied multi-fold in the last 13 years and created many millionaires.
many people may feel they have missed the early bitcoin bus. they might find it difficult to navigate the crowded world of crypto assets in search of the next best thing. such people could choose to get some exposure in proxies that will benefit from the development of the crypto economy.
as they say, when you are in a gold rush, sell picks and shovels. similarly, one can also invest in firms that are providing the proverbial ‘picks and shovels’ or are helping build the supporting infrastructure around this nascent space.
for example, many cryptocurrencies require powerful graphic processors to solve complex problems in order to ‘mine’ new tokens. chipmakers Nvidia and AMD have seen demand for their products go up, which is also reflected in their share price. Nvidia’s shares have jumped 1240% in value over the past five years and similarly, AMD’s price has rocketed 1990% in the same period.
similar to two chipmakers, Jack Dorsey’s payment firm Square has Cash App, which allows its users to buy, hold, send, receive, and sell Bitcoin. along with Square, Dorsey has big plans to integrate bitcoin with Twitter and also built decentralized applications, more commonly known as DApps.
there's also Coinbase, the leading crypto exchange in the US, which got listed earlier this year.
market participants have also picked up on these supporting firms which stand to benefit from the growth of the crypto and blockchain economy and have structured products that allow you to invest in this emerging space.
There are many exchange-traded funds (ETFs) that invest in the companies that are leading the new crypto economy. To name a few, Bitwise has the crypto Industry Innovators ETF, which invests in crypto exchanges and mining firms. Then there is the Amplify Transformational Data Sharing ETF, which invests in businesses involved in blockchain.
These ETFs can serve as a proxy to a portfolio of firms that stand to gain from the crypto ecosystem while at the same time helping to reduce the risk and volatility, which is a common sight with crypto assets.