How to Profit from the Crypto Craze without Actually Investing in Them

Bitcoin hit record highs in the price per coin and total valuation in 2017. Yet it fell 30% in late December 2017. It continued to fall to below $10,000 by mid-January. Alt-coins, alternative cryptocurrencies like Bitcoin, have followed a similar trend. All of these alt-coins come with their own risks if you own them directly. Here are a few tips on how to profit from the crypto craze without investing directly.

Futures

According to WallStreetHedge.com, in late 2017, CME Group and CBOE Global Markets announced they were given the approval to list bitcoin futures contracts. Futures contracts provide a way to profit from shifts in the currency valuation without having to own the cryptocurrency directly. You can also use them to hedge your risk, which is the original purpose of futures contracts.

Invest in Fintech Firms

Fintech or financial technology firms are adopting blockchain, the ultra-secure real-time processing algorithm behind Bitcoin. A few are utilizing Bitcoin, too. They’re revolutionizing entire business sectors, whether it is rolling out impossible-to-fake credentials or providing secure asset tracking for everything from land deeds to stock certificates. If you want to invest in fintech startups, your options including buying those mature enough to be on the stock market to joining crowdfunding initiatives with specific companies.

A more abstract strategy is investing in companies that are processing Bitcoin payments so that you profit when they earn commission on every transaction. For example, Square is allowing consumers to buy Bitcoin through its app. You can buy shares of Square and thus profit from its adoption of Bitcoin. A side benefit of this strategy is that these companies will still make money processing other payment methods, even if Bitcoin is replaced by other cryptocurrencies or alt-coins collapse.

Another indirect investment option is investing in companies that are accepting Bitcoin as payment. Overstock, Shopify and several other e-commerce platforms all in this category.

Invest in Their Suppliers

If you want to invest in agriculture, you can try to find farmland to buy and hold (or manage), work with real estate investment trusts, or you can buy stock in suppliers to agricultural firms. This means buying stocks in pesticide and fertilizer manufacturers, irrigation, and farm equipment manufacturers, or veterinary suppliers, and animal feed firms.

You can use the same strategy with Bitcoin and other cryptocurrencies. You don’t have to invest in Bitcoin to profit from it; buy stock in companies making the graphics processing units that are being snapped up by cryptocurrency miners of all types. Semiconductor, ASIC, and microchip manufacturers are good investments to ride as demand for their hardware continues to grow. A side benefit from investing in these firms is the fact that demand for their hardware will remain strong as cloud farms are set up to support virtual infrastructure, even if crypto-currencies are a flash in the pan.

Conclusion

Options like futures or investing in financial technology firms that are integrating the technology into their operations offer a way to invest indirectly in cryptocurrency price swings without owning the actual items. If you are a bit wary of the crypto mania, these are perfect ways that you can still turn a profit without risking your shirt.