The second most popular method to buy crypto is on a decentralized exchange like IDEX. For these trading facilities, you need to understand the market and the tech behind a little bit better. You may connect your wallet to the decentralized exchange and then you can start trading. A lot of the marketplaces still do not have a strict KYC and AML process and you are more anonymous. There are always some arbitrage possibilities since the prices frequently differ from the quotations at high volume exchanges, in particular for smaller coins.
Professional traders and asset managers can also approach an OTC desk like B2C2 or Cumberland. The OTC desk will match a buyer and a seller which, in most cases, want to trade a big amount and prefer to do the trade with one counterparty and recognize minimal slippage on their larger trading orders.
If you want to get exposure to blockchain technology, and not cryptocurrencies per se, you might have already considered buying a traditional Blockchain ETF like the Invesco Elwood Global Blockchain UCITS ETF. While it is very convenient to order in a traditional manner and you’re most likely familiar with such structures, it doesn’t really offer you any sort of real crypto or public blockchain exposure. They invest in listed equities of companies which have some connection to blockchain like IBM (Hyperledger) or Nvidea (computing power for Bitcoin mining). So, yes, it might make sense to allocate this to a balanced portfolio, but I would categorize this as a general tech investment that clearly has more allocation to the Nasdaq than to crypto assets themselves.
Today there are also a couple of certificates trading on the open market from issuers like Coinshares (via XBT Provider) or Vontobel, which mostly focus on single asset strategies. This is very convenient as you just need the ISIN and then you can order it with your favorite broker or investment manager. Also, you don’t need to set up a wallet since the asset manager (issuer of the certificate) is in charge of the custody and you’re less exposed to cybersecurity risks.
With the products being listed you also have a certain degree of flexibility. You can execute orders daily on the market and monitor the performance continuously. But naturally, this also comes with some added costs, such as a 2-3 % management fee per year. Further, the bid-ask-spreads (IE, difference between buy and sell prices) are often higher than trading the underlying asset itself. In your due diligence, you should have a look at the issuer, the replication strategy and whether or not your assets have some sort of insurance.
There are also providers of cryptocurrency futures and options like the CME group. You can hedge Bitcoin exposure or harness its performance with futures. Future contracts involve a certain expiration date. One common drawback of investing in future contracts is that you don’t have any control over future events, the most…
Read more:A Beginner’s Guide to Crypto Investing