Bitcoin Investing Through Stocks and ETFs
Simple ways to get Bitcoin exposure
“I think I want to get some exposure to Bitcoin. The 200% returns per year are just too sweet to pass up.”
Me: “Yeah, opening an account on like Gemini or Coinbase is really easy. And, if you want to take self-custody of your coins, you can get a Bitcoin hardware wallet, too. Won’t have to risk leaving the coins on the exchange.”
“Oh. Sounds complicated. I can’t just buy Bitcoin through my broker or my TD Ameritrade account?”
Me: “Well, no, not directly, not at this time. Tell you what, here are some great ways to get some Bitcoin exposure into your portfolio. This might be more what you’re looking for.”
Great Stocks and ETFs for Bitcoin Exposure:
Want to go for the potentially huge Bitcoin returns but really keep it simple? There are plenty of publicly-held stocks that will get you significant Bitcoin exposure. These stocks are not all the same in their operations and holdings, so make sure you know the difference.
MicroStrategy Corp. (MSTR), under CEO and Bitcoin bull Michael Saylor, buys Bitcoin directly with their corporate cash. What’s more, they’ve used leverage and purchased a lot more. Right now, they own 121,044 coins, equal to about .6% of all the Bitcoin that will ever exist. Talk about being all in. Their holdings are currently worth over $6 billion, and they’re sitting on a profit of over $2.5 billion.
How’s the stock done, you wonder? Since Saylor’s Bitcoin buying spree, the MicroStrategy stock has grown in price from $145 to over $600. No coincidence.
Saylor is also, personally, sitting on over 17,000 Bitcoins, with an average cost of $9,882 each. Nice.
Coinbase Global (COIN), which just went public in April, is a good stock play for those who believe in the broad cryptocurrency market. The company is a crypto exchange that boasts over 73 million account holders. As such, they make money from trading fees and commissions. The stock is trading at about $280 per share this week, and analysts’ predictions call for a target price of between $250 and $600 within a year. That’s quite a range, for sure, but the company is already profitable and growing at a nice rate. The stock’s price chart appears to be loosely correlated with the Bitcoin price as well.
Coinbase has stated that it wants to become the “Amazon” of digital assets.
Riot Blockchain, Inc. (RIOT) is a crypto mining stock and its price has risen from just over $1 in early 2020 to over $25 right now. Price targets for 2022 range from $45 to $82. Based in Colorado, RIOT right now has a fleet of over 27,000 miners.
They currently hold about 4,000 Bitcoins.
Silvergate Capital (SI) is another company whose stock price has exploded over the past year-and-a-half. From $9.50 in March of 2020, the stock has run to $163 as of this week. The company is profitable every year, and analysts like the stock to get to an average target of $202 this year. Some think it can go as high as $260.
SI is actually the holding company for Silvergate Bank, which provides all traditional banking services to businesses, institutions and individuals. Based in La Jolla, California, Silvergate is known as the “crypto-friendly bank” that offers more services to the crypto industry than any other bank.
Grayscale Bitcoin Trust (GBTC) is not a stock, a mutual fund, or an ETF. It is actually a closed-end grantor trust, which invests directly in Bitcoins and attempts to mirror the price of the TradeBlock XBX Index for Bitcoin prices. The shares are traded over-the-counter and as such can trade at a premium or a discount from the actual Bitcoin price.
GBTC is an easy way for any investors to play the Bitcoin market, especially inside retirement accounts, where it is difficult to buy actual Bitcoin exposure. Some may be turned off by the 2% management fee, but when compared to crypto exchanges that often charge 1.5%, it isn’t all that bad.
The trust is currently petitioning the SEC to convert to an ETF structure. It currently manages over $38 billion in assets.
Amplify Transformational Data Sharing (BLOK) is an exchange-traded-fund that invests in companies in the cryptocurrency and blockchain space. If you want to diversify a bit and get a piece of some of the companies discussed above, this fund is for you.
Here are some of BLOK’s top holdings:
MicroStrategy
PayPal
Square, Inc.
Marathon Digital
NVIDIA
Silvergate Capital
The fund sells for about $49 a share right now, and has more than tripled in the past eighteen months. The price will fluctuate based on the cryptocurrency market prices, but it also provides good diversification with somewhat less volatility than Bitcoin.
The above analyses of stocks and ETF funds do not constitute endorsements of any company and are not recommendations to purchase any security or engage in any particular strategy. Please consult your financial advisor.
Note: I personally own shares of Amplify Transformational Data Sharing (BLOK).
LINK: The Bitcoin Files e-book on Amazon!
Issue No. 37, December 31, 2021.
Rick Mulvey is a CPA, forensic accountant and crypto consultant. He writes about all things Bitcoin, and yells at the Yankees and Giants. He also runs marathons and makes wine, neither professionally.
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