Nov 26, 2021
After a glorious rally in October, Bitcoin has pulled back below $60,000. Still, Ark Invest’s Cathie Wood remains optimistic about the world’s largest cryptocurrency.
In fact, she’s even more bullish than before.
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Last week, Wood told Barron’s that if “institutional investors move into Bitcoin and allocate 5% of their portfolios,” the price of the cryptocurrency would soar to about $560,000 by 2026.
Her latest projection implies an upside of over 800%. That might seem far-fetched, but remember Wood was right on the money when she predicted a 1,200% upside in Tesla.
So here’s a look at a couple of ways to play the crypto boom — including options with small price tags and zero commissions.
Bitcoin ETFs
Wood herself is offering a new way to invest in cryptocurrency. In September, Ark Next Generation Internet ETF tweaked its prospectus to include exposure to Bitcoin via Canadian ETFs.
The first bitcoin ETF on the New York Stock Exchange started trading last month, but Canada has been ahead of the U.S. for a while. Several Bitcoin ETFs launched in Canada this year, including Purpose Bitcoin ETF, 3iQ CoinShares Bitcoin ETF, CI Galaxy Bitcoin ETF and Evolve Bitcoin ETF.
In the U.S., the debut of the ProShare Bitcoin Strategy ETF was arguably a major catalyst behind Bitcoin’s rally in October. The fund holds bitcoin futures contracts that trade on the Chicago Mercantile Exchange.
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Investors who want exposure to the crypto market can invest in these ETFs, but you can also buy Bitcoin directly. Some investing apps allow you to buy both cryptocurrencies and ETFs commission-free.
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Cryptocurrency stocks
Companies that have tied themselves to the crypto market provide another way for investors to benefit from the crypto rally.
For instance, enterprise software company MicroStrategy purchased 9,000 bitcoins in Q3. That brings its total bitcoin count to 114,042, a stockpile worth roughly $6.7 billion.
Because of MicroStrategy’s huge Bitcoin stake, some investors have used it as a proxy for investing in the cryptocurrency. In the past, rallies in Bitcoin usually led to similar moves in MicroStrategy’s share price.
Then there’s Riot Blockchain, which mines Bitcoin and hosts Bitcoin mining equipment for institutional clients. Thanks to soaring Bitcoin prices, Riot shares have returned a staggering 492% over the past 12 months.
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Investors can also check out Coinbase, which runs the largest cryptocurrency exchange in the U.S. The company’s share price fell below its IPO price of $250 during the summer, but the pop in cryptocurrencies last month has brought it back to over $300.
And while crypto stocks can be pricey, you can get a piece of these companies using a popular app that allows you to buy fractions of shares with as much money as you’re willing to spend.
A 'finer' alternative?
At the end of the day, cryptocurrencies are volatile. Not everyone feels comfortable holding an asset that seems to make wild swings every week.
If you want to invest in something that has little correlation with the ups and downs of the stock market and the crypto market, you might want to consider an overlooked asset: fine art.
Contemporary artwork has already outperformed the S&P 500 by a commanding 174% over the past 25 years, according to the Citi Global Art Market chart.
Investing in art by the likes of Banksy and Andy Warhol used to be an option only for the ultra-rich, like Wood. But with a new investing platform, you can invest in iconic artworks, too, just like Jeff Bezos and Bill Gates do.
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Jing is an investment reporter for MoneyWise. He is an avid advocate of investing for passive income. Despite the ups and downs he’s been through with the markets, Jing believes that you can generate a steadily increasing income stream by investing in high quality companies.
