So you can invest in bitcoins cheaply

Enlarge image

Bitcoin logo in Times Square in New York:

The cryptocurrency is experiencing an unprecedented hype

Photo: John Angelillo / imago images / UPI Photo

At the end of last week, a Bitcoin cost just under $ 65,000, now it's just under $ 54,000.

A price slide of around 18 percent within a few days.

On the other hand: twelve months ago a Bitcoin was still available for $ 6,900.

Seen in this light, the most important cryptocurrency is possibly still on the upswing.

Strong price fluctuations like these are part of the business in the market for cryptocurrencies, investors who invest money there should always be aware of this. The recent setback could still attract many: Is there an opportunity here to join the Bitcoin upswing belatedly?

The good news: investors in Europe currently have an advantage over those in the US, for example.

Because they have one more opportunity to put money on the Bitcoin.

We are talking about exchange traded funds or exchange traded notes, so-called ETFs or ETNs.

While a handful of these generally inexpensive, flexible investment vehicles with a focus on Bitcoin and other cryptocurrencies are already being offered in this country, ETF houses in the USA are still waiting for the green light from the SEC.

The US regulator has rejected every application for approval of an ETF on cryptocurrencies since 2013, Bloomberg recently reported.

The SEC cites the risk of manipulation and criminal activities as reasons.

US oversight has concerns

In view of the current hype about Bitcoin and the recently much noticed IPO of the largest US crypto trading platform Coinbase on the Nasdaq, the queue of waiting investment houses has become even longer. No fewer than eight ETF providers are currently waiting for the SEC's positive decision, according to Bloomberg, including the Galaxy Digital Holding owned by billionaire and crypto fan

Michael Novogratz

(56). According to observers, however, it is unlikely that the negative attitude of the supervisors in the USA towards ETFs on Bitcoin and Co will change in the near future.

In other countries, however, it looks different. For example, the first Bitcoin ETF in Canada already has more than a billion dollars in fixed assets, according to Bloomberg. Investors in this country also have the option of choosing between some of these investment products (see table).

The advantage: Exchange Traded Funds or Exchange Traded Notes, as it should correctly be called in this case, save investors the trip to special crypto platforms such as Coinbase, where they would have to set up a so-called wallet for the safekeeping of Bitcoins or other cyber money. Rather, ETNs are bonds whose value tracks the price of Bitcoin, but which can be brought into the depot relatively conveniently via an online broker. As a rule, they have a relatively low cost burden and can be traded at short notice.

However, there are a few things that investors need to consider with this investment vehicle as well.

In the opinion of Thomas Neumann from the Bestadvice asset management company in Irschenberg near Munich, the physical deposit is particularly important.

"This means that the ETF is 100 percent secured by Bitcoin and that the values ​​are best stored in cold storage with a regulated crypto custodian with crypto insurance," said Neumann.

"In addition, it should be tradable on Xetra, also for reasons of cost when buying and selling."

"Cold Storage" is a special device on which crypto currencies such as Bitcoins can be stored.

It is considered to be the safest storage method for these digital assets.

Neumann also points out that not all of the ETFs in question have the same market liquidity, something that investors should pay attention to in his opinion.

"There are also significant differences in the fees of the ETFs on offer," he says.

"Here alone there are differences of 50 percent and more."

According to Neumann, a special feature that investors should also be aware of is the fact that these ETFs or ETNs are bonds.

"For this reason, you should definitely only invest in Bitcoin ETFs that are fully secured and exchange-traded," said the expert.

In Neumann's opinion, if you do everything right, you get Bitcoin and Co into your custody account that can certainly help diversify your assets - and thus ultimately spread your risk.

In order to achieve this effect, according to Neumann, at least 5 percent of the investments should be made up of crypto currencies, preferably distributed over two to three suitable ETFs, as the expert says.

"A weighting of far below 5 percent makes no sense," says Neumann.

"There would be no diversification effect."

cr