There’s been a lot of hype surrounding the approval of a Bitcoin Futures ETF in the US, but the absence of one in the UK makes it impossible to gain direct exposure to Bitcoin via a brokerage platform. Regardless, there are several ways to add this powerful asset class to my investment account.
10 stocks to gain exposure in my ISA
I’m adding Bitcoin to my ISA in various ways. Scoring highly in terms of Bitcoin exposure are MicroStrategy, Galaxy Digital Holdings, and Voyager Digital, the last of which is up 2,400% on the year but should have plenty of room to grow through the later stages of this bull run. MicroStrategy is also interesting because it currently offers Bitcoin at a discount: the Bitcoin that I’d receive with each share is roughly 8% cheaper than if I were to buy on ‘spot’ (i.e. via an exchange).
Better known than the above, but also granting me some direct exposure, is Tesla, though of course there are other considerations here. It is rumoured that Tesla is on the verge of resuming Bitcoin payments for its cars, which would only further accelerate the cryptocurrency’s mainstream adoption.
Then there are mining stocks. I already own Argo Blockchain, though I particularly like Hut 8 Mining Corp, which is based in the energy-rich Alberta. Following Tesla’s backtracking on Bitcoin payments on environmental grounds this May, there’s been widespread concern about the sustainability of Bitcoin mining, and I appreciate Hut 8’s clean energy initiatives. The company also holds the highest number of self-mined Bitcoin out of any publicly-traded company.
While the above give me some direct exposure to Bitcoin, I’m also looking at companies with crypto at the core of their operations. One of them is Coinbase Global, which has recently announced plans to launch an NFT marketplace, offer custodial services for Meta’s crypto project, and develop a cloud service for the crypto industry. Its long-term future looks bright.
Diversifying my holdings further, I’m thinking of adding a small amount to Square, Visa, and Mastercard, the last of which jumped on the crypto-payment bandwagon only last week. All of these companies provide indispensable rails between traditional and decentralised finance, and will help to secure Bitcoin’s role in cross-border transactions.
Thematic crypto ETFs are no doubt around the corner, but adding a little to all or some of the above means that I won’t miss the boat.
A high-risk strategy
It goes without saying that buying Bitcoin and crypto-orientated stocks is a risky strategy.
Companies with sizeable Bitcoin exposure are vulnerable to price fluctuations, while exchanges are sensitive to trading volumes. Since Decentralised Finance (DeFi) is also a young industry, there’s plenty of competition risk. On these grounds, I’ll be watching these stocks carefully.
Nonetheless, in the current financial environment, the risk of not having exposure to the wider crypto industry is also significant. Perhaps I’ll start by bodyboarding rather than surfing these mammoth waves.