How to invest in Crypto?

Many people are tempted to trade in the cryptocurrency sector.

You could just buy some crypto currency such as Bitcoin or Ethereum from a broker such a Coinbase (COIN) or CRYPTO for Bitcoin. You need to also bear in mind that any crystallised gains made on a sell transaction of cryptocurrency may be a taxable event (e.g. Capital Gains Tax in the UK) and should be declared. Coinbase will inform HMRC of any large crypto inflows (I think around £5k+/yr going into crypto assets).

Many people invest in MicroStrategy (Nasdaq:MSTR) which loosely follows Bitcoin's performance (though you would be hard pressed to know what it does from the description!). MSTR uses investors money to buy Bitcoin and they will have approx. 4% of all Bitcoins soon. However, the share price has gained x4 more this year than Bitcoin has! It seems mad to me!

There is also LON:ARB and Coinbase (COIN):

Another alternative is to buy a crypto ETF such as VanEck Crypto and Blockchain Innovators UCITS ETF (DAPP/DAGB). This can be bought within an ISA and thus gains are free of all tax.

The VanEck Crypto and Blockchain Innovators UCITS ETF seeks to track the MVIS Global Digital Assets Equity index. The MVIS Global Digital Assets Equity index tracks companies from around the world that are active in the blockchain industry.

 

The ETF's TER (total expense ratio) amounts to 0.65% p.a.. The VanEck Crypto and Blockchain Innovators UCITS ETF is the only ETF that tracks the MVIS Global Digital Assets Equity index. The ETF replicates the performance of the underlying index by full replication (buying all the index constituents). The dividends in the ETF are accumulated and reinvested in the ETF.

 

The VanEck Crypto and Blockchain Innovators UCITS ETF has 233m GBP assets under management. The ETF was launched on 30 April 2021 and is domiciled in Ireland.

I have added a few ETFs below from Justetf.com. The 'Trump effect' around Nov 4th is easy to see:

You can see what stocks are held within the ETFs below:

Riot and Cleanspark apparently are the potential rising stars to keep an eye out for. So instead of DAPP you may prefer BKCH or BLKC and GFOF which have different top holdings portfolio (inc. Paypal, Robinhood and Northern Data, etc.) which you could also hold as well?

And here are their performance figures:

Over the last few years, you can see that all of these have performed well. With Trump being bullish on Crypto (apparently), the hype may continue for at least a while longer. The bubble could burst at any time however.

In my opinion, investing in one of these ETFs should be held in the same regard as betting at the roulette table. You could win big, but eventually lose everything!

So I am treating this in the same way. I only gamble what I expect to lose and I cash in my profits as soon as I can to get back my original stake money. I will then let the rest ride but keep a close eye on it!

These are not long term ETFs and are extremely volatile (75%) and the price can drop 50% within two weeks. You will need a strong stomach. So punk, are you feeling lucky?

Make my day!

 This is not investment advice and I am not a Financial Advisor. Please do your own research.