Unless you’ve been sleeping under a rock these last few years, you’ve no doubt heard of bitcoin.
Created in 2009 by mystery man Satoshi Nakamoto with a plan to circumvent banks. Bitcoin is untraceable and unregulated. You can use bitcoin to buy furniture on Overstock.com Inc (NASDAQ:OSTK) or book a hotel on Expedia Inc (NASDAQ:EXPE). But with the price exploding, you might think twice about paying for products and services with a currency that might be worth a great deal more tomorrow.
Because bitcoin is exploding in value, many are wondering how to invest and make millions.
The digital currency had risen around 20x this year, climbing from less than $1,000 to more than $20,000 on some exchanges. But it has posted heavy declines since.
If you’re bullish on bitcoin, it’s easy enough to open an account at one of the bitcoin investment portals such as Coinbase.com, and buy bitcoin. They’ll even store the currency for you in a virtual wallet or you can choose a paper, or hardware wallet.
But, just because you can invest in bitcoin, doesn’t mean you should. No one knows the future price of bitcoin. There are rumors of a bitcoin bubble, ripe to burst while other pundits expect continuing growth.
Invest in bitcoin only if you can afford to lose the money that you dedicate to this new currency.
No Robo-Advisor Options
Robo-advisors blew onto the investment marketplace in 2009 with the launch of Betterment. Based on the modern portfolio theory research that index fund investing outperforms active investment management, the typical robo-advisor queries your goals and risk profile and creates a diversified investment portfolio in line with your questionnaire responses. Then, the platform rebalances your investments back to your original percentages periodically for a small fee, far below the fees of a traditional financial advisor.
Since 2009, robo-advisors have diversified and created a variety of investment strategies from Blooom’s 401(k) management to Hedgeable’s hedge fund management robo-advisor. Then there’s M1 Finance and Motif which allow you customization in their robo-advisory models.
Understandably, bitcoin investors are wondering if there’s a robo-advisor just for them.
At present, robo-advisors have not waded into the bitcoin investing arena. But, there are bitcoin investing alternatives for those seeking alternative ways to invest in bitcoin and cryptocurrencies.
Bitcoin Investing Alternatives
Bitcoin futures trading recently launched in Chicago on both the Cboe Futures Exchange and the CME, the world’s largest futures exchange. With bitcoin futures trading, institutional investors are more likely to jump into the bitcoin market and thus increase liquidity and stability in the cryptocurrency.
With the popularity of index fund investing showing no signs of slowing down, Bitwise Asset Management just debuted HOLD 10, which is claimed to be the world’s first crypto-index fund, holding 10 of the largest cryptocurrencies. The fund, though, is only open to accredited investors with a $25,000 minimum investment. More bitcoin fund proposals are in the SEC regulatory queue.
Alternatives are likely to proliferate. Still, proceed with caution.
As of this writing, Barbara A. Friedberg did not hold a position in any of the aforementioned securities or in any cryptocurrencies.