3 ways to get into crypto if you haven’t yet

You can diversify your portfolio with cryptocurrency directly or indirectly with ETFs and futures.

Crypto just keeps getting hotter.

Although the price of bitcoin has dropped from its record high last year, it is expected to continue soaring through the new year under the Trump administration. Big changes are expected, including the appointment of the first Crypto Czar, David Sacks.

Given its significant risks and extreme volatility, cryptocurrency is only suitable for advanced, experienced investors with a high-risk tolerance and a well-diversified portfolio of traditional assets like stocks and bonds.

“Long story short, if you’re uncomfortable with volatility, this is probably not an asset class you should own,” Craig Robson, founding principal and managing director at Regent Peak Wealth Advisors, told B-17.

While cryptocurrency is not recommended for beginners or those with a low risk tolerance, here are three ways to get into crypto if you’re ready to take the plunge.

1. Invest in crypto directly through an online exchange

The traditional way of investing in cryptocurrencies is through one of the best cryptocurrency exchanges, like Coinbase or Binance. Instead of a third-party institution, you can also trade with peer-to-peer (P2P) platforms.

Direct crypto ownership offers greater control and the potential for higher returns than an ETF fund. Additionally, direct ownership has no management fees.

Robson told B-17 that he recommends having up to “5% of one’s portfolio be in crypto to give people enough exposure.”

Unlike traditional banks and brokerages, crypto platforms are fairly new, which makes them more susceptible to fraudulent activity, data breaches, financial instability, and the continuous uncertainty around trading regulations.

Many highly regarded crypto trading platforms have suffered from legal suits, bankruptcy, or large-scale hacks. The most prominent is FTX, which went bankrupt in 2022. Even Coinbase, one of the largest and most trusted crypto trading platforms, is in an ongoing legal battle with the SEC.

“If you’re looking at diversifying with crypto exposure, you can do so independently or with the help of a financial advisor,” Kristen Mirabella, head of partnership at Eaglebrook, told B-17. “Start small and make sure you’re using a legitimate platform.”

2. Invest in crypto indirectly through crypto ETFs

Rather than buying bitcoin directly, “an ETF is more or less tracking the price and direction of bitcoin,” Mirabella said. “I think it’s a great option for someone who wants that exposure but isn’t necessarily ready to dive in directly.”

Indirect exposure through a fund like an ETF or futures ETF is an attractive option for investors not interested in participating in the decentralized blockchain system and feel more comfortable trading through a traditional or online brokerage, like Fidelity or E*TRADE.

“Crypto ETFs are a fantastic way to access the crypto market and diversify your portfolio,” Robson said. “You can own it in very small dollar amounts, making it compelling for somebody who wants to dip their toes in or doesn’t have a lot of wealth yet.”

Robson further explains that ETFs simplify crypto investing, eliminating the hassle of properly storing and securing private keys through a digital wallet.

While crypto ETFs are more accessible to the average investor, the same risks apply, including the asset’s underlying high volatility. ETFs also often come with management fees that may diminish potential gains over the long term.

Examples of high-performing crypto ETFs include iShares Bitcoin Trust ETF, Fidelity Wise Origin Bitcoin Fund, Grayscale Bitcoin Trust ETF, and Bitwise Ethereum ETF.

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3. Buy shares of crypto-linked stocks

Another indirect way to gain crypto exposure and participate in the market is to buy shares of crypto-linked stocks, such as those of companies that develop or facilitate blockchain technology. Investing in these businesses helps further the industry’s innovation and technology development.

Since you’re investing in the stock market and not the crypto market, you won’t be subjected to as much risk as you would with a direct crypto investment or crypto fund. However, you probably won’t see the same type of return.

Popular crypto-linked stocks include Coinbase (COIN), MicroStrategy (MSTR), BlackRock Inc. (BLK), and Riot Platforms (RIOT).

Just like with any investment, thoroughly research a company before buying shares and consider diversifying your investments across multiple businesses in the industry to mitigate potential losses.

No matter how you choose to get into crypto, “Make sure you know what you own and why you own it,” Robson said.

“If you’re doing research and you’re understanding what you’re investing in,” Mirabella added, “it’s easy to avoid investing in the wrong token or platform.”