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How Can I Invest in Crypto Through the Stock Market?

For some people, the idea of buying bitcoin or some other cryptocurrency is still far too scary.

With all the exchange hacks that have taken place over the years and the persisting difficulties with securing one’s own private keys, some people find that a direct investment in a particular cryptocurrency is simply not practical at this time. However, there are plenty of ways of investing in the crypto asset industry besides a buying bitcoin or another crypto asset.

Here are four different ways to get exposure to crypto via the traditional stock market.

It's possible to gain exposure to Bitcoin by investing in certain stocks.

1) Coinbase

Coinbase ($COIN) is the most well-known cryptocurrency brand in the United States, and Binance is the only other company that has a similar recognition when it comes to the global perspective. Buying COIN on the NASDAQ will give you exposure to the entire crypto market as a whole, as Coinbase has expanded to include a wide variety of different crypto assets over the years. While most people just think of Coinbase as a crypto brokerage platform, the company has built a large number of different crypto products over the years.

Additionally, Coinbase has been heavily involved in the Ethereum ecosystem, and the company has been focused on developing tools to further the growth of that blockchain network specifically through open-source projects like their Coinbase Wallet offering. If you’re someone who doesn’t really understand what’s going on in the crypto space but would still like to gain some exposure to the growth in this emerging market, Coinbase is a solid option because they’re able to be profitable no matter what direction the crypto markets are moving.

As long as there are crypto services that can be provided in a more user-friendly, centralized manner, it’s likely that Coinbase will be selling the shovels associated with this digital gold rush. Unlike many other publicly-traded companies that have started to dabble in the crypto space, Coinbase is entirely focused on crypto and does not have other aspects of their business that are unrelated to this industry.

2) Square

Square ($SQ) and Twitter CEO Jack Dorsey has become one of the most prominent supporters of bitcoin in recent years.

While the only bitcoin integration on Twitter available so far is a custom emoji that automatically shows up after the #Bitcoin hashtag, financial payments provider Square has had the crypto asset integrated much more closely into their app. Users of Square’s Cash App are able to buy and sell bitcoin at the click of a button, and the platform even allows users to deposit and withdrawal bitcoin to and from outside sources via the underlying Bitcoin network, which is a rarity when it comes to traditional tech companies.

While Square is still mostly involved with the processing of payments denominated in fiat currency, it’s clear that the company has a long-term vision for furthering the development of bitcoin as the native currency of the internet. Square Crypto is a segment of the overall Square business that is focused on furthering the technical development of Bitcoin through the issuance of grants to various open-source projects in the space. Square also holds hundreds of millions of dollars worth of bitcoin on their balance sheet, so it’s clear that they’re really putting their money where their mouth is when it comes to their belief in a strong future for bitcoin.

Dorsey is also personally an investor in Lightning Labs, which is a major company in the Lightning Network space. Due to this investment and comments Dorsey has made in the past, it’s clear that Square, and perhaps even Twitter, has plans for integrations with this layer-two payments network for Bitcoin in the future. It should be noted that Dorsey and Square do not appear to have interest in any altcoins at this time, although Dorsey did sell an non-fungible token (NFT) of the first tweet he ever sent.

3) PayPal

Although many customers have had their issues with PayPal ($PYPL) over the years and Bitcoin was originally intended to be somewhat of a replacement of the online payments giant, they’re finally starting to get more involved in the cryptocurrency space.

In late 2020, PayPal announced that they would enable crypto trading on their platform, and they’re also rolling out the ability for users to withdraw their crypto to their own personal wallets. Additionally, the adoption of crypto by PayPal has had a tremendous effect on the use of crypto assets for payments. PayPal is still the most common way in which payments are handled online, so allowing their users to easily use their crypto holdings for traditional online payments is a major win for the crypto space as a whole.

Currently, PayPal supports the trading of Bitcoin, Ethereum, Litecoin, and Bitcoin Cash. Since PayPal is a payments company, the crypto play here is going to be quite similar to that of Square; however, it’s clear that PayPal is more open to the bitcoin alternatives, and that is likely the main differentiator between these two options for investing in crypto via the stock market at this time.

4) Microstrategy

If you’re just interested in getting exposure to the price of bitcoin, then Microstrategy ($MSTR) is the best option for you. While the company is also a leader in business intelligence with the leading enterprise analytics platform, Microstrategy recently pivoted to a focus on bitcoin through the leadership of CEO Michael Saylor.

Last year, Saylor realized that the cash sitting on the company’s balance sheet was not gaining any yield due to the current state of the interest rate market, and he also realized that the real returns on the company’s cash holdings would be negative due to an expected increase in inflation. Although Saylor originally dismissed bitcoin publicly on Twitter back in 2013, he is now convinced that the crypto asset will become the dominant monetary network in the world. He has compared buying bitcoin today to investing early in the likes of Google, YouTube, Apple, and Facebook.

The company currently holds nearly $5 billion worth of bitcion, and they’ve been adding to their holdings on a regular basis. Due to their large bitcoin holdings, Microstrategy’s stock price has been trading in a manner similar to how a bitcoin ETF would trade on the stock market. Microstrategy plans to use bitcoin as their primary treasury reserve asset going forward, and Saylor has indicated that the company will never sell their bitcoin at a higher price. In other words, the plan is to adopt the bitcoin standard and leave fiat currency behind.

There are a variety of other, smaller stocks that can allow you to get exposure to the growing crypto market, such as Grayscale’s Bitcoin Investment Trust ($GBTC), but these four options are a solid starting point if you’d like to start investing in crypto via the stock market.

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