How To Trade Cryptocurrency Without Owning Any
There are plenty of reasons not to invest in cryptocurrency. Some people assess the market and simply find it to be too volatile and unpredictable. Some don’t buy into the core concept behind cryptos. And some are just waiting to see how long it sticks around, or how much more seriously it’s taken in the years to come. But for those who don’t invest because they don’t like the idea of buying cryptocurrency and setting up digital wallets, there are other ways into the market.
Of course there’s no means of investment quite so direct as simply buying and holding cryptocurrency. But the following are legitimate ways of trading on its value if you’d rather avoid direct purchase.
Use a Trading Bot
A crypto trading bot is essentially an automated program that makes cryptocurrency investments on your behalf, according to guidelines and parameters you set in advance. While this may sound like a sort of advanced, new age idea, crypto bots are actually responsible for a significant portion of investment that happens today. This makes them perfectly reliable in the eyes of many, and they can be particularly useful for those who are looking for methodical gains over the long term (as opposed to short-term, high-risk/high-reward trades). For the purposes of this conversation though, a trading bot basically takes your money and does the trading for you — saving you the hassle (if that’s how you see it) of managing your own cryptocurrency.
The act of buying or selling cryptocurrency CFDs allows you to trade with leverage and make investments 24/7, all without ever owning a single coin. This is because CFDs are contracts, rather than trades in the traditional sense. Buying a cryptocurrency CFD means endorsing the idea that its value is going to increase, and selling means the opposite — and that’s about all there is to it. A contract that predicts direction correctly leads to a return on investment, and an incorrect prediction makes for a loss. When you’re trading, you might want to look at this options like trade stocks, ETFs, crypto for getting better profits.
The idea of cryptocurrency futures trading first emerged in 2017, and has since become steadily more popular. And basically they work the same way futures for other assets do, allowing investors to speculate on future value. Holding a “long” futures position means agreeing to buy cryptocurrency at a price determined in advance when the futures contract comes to an end; holding a “short” position means agreeing to sell. With these arrangements you can profit off of speculation without having to trade cryptocurrency, by agreeing to a favorable price and profiting on its difference with the price at the end of the contract.
Invest in a Crypto Fund
The first crypto index fund emerged a few yeas ago, with $4 million in initial funding. And for all intents and purposes, it’s about as close as you can get to trading cryptocurrency like a stock. The fund combines the 10 largest cryptocurrencies and allows people to invest in them as a cluster — with the total value of the coins combining to define the fund’s value. There aren’t too many options like this one just yet, but those who are interested can likely find a fund to buy into.
Buying cryptocurrency directly is still an option as well, and we’d note that it tends to be simpler than people expect initially. But these options make it clear that you don’t have to open a crypto wallet and buy coins to invest in this digital currency.