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Investing.com – Led by the which hovered above $32,000 yesterday after a more than 10% 24-hour rally, cryptocurrencies are rebounding this week, and some believe recent gains could spell the end of the downward trend that has weighed on cryptocurrencies for several months.
In this article, we will therefore take stock of the various means available to investors to invest in Bitcoin and cryptocurrencies in general.
Direct purchase of cryptocurrencies
The easiest way to take advantage of a possible cryptocurrency bull market is to buy cryptocurrencies directly. Nowadays, it is very easy to acquire Bitcoin and other cryptocurrencies, payment platforms like Paypal or Square (NYSE:), or even online banks like Revolut allowing a simplified purchase in a few clicks.
It is of course also possible to open an account with a cryptocurrency exchange platform such as Coinbase or Binance. Note that classic online brokers also allow the purchase of cryptocurrencies, although this is often through CFDs.
For the past few months, investors have also had access to Bitcoin ETFs based on futures contracts. The best known is the ProShares Bitcoin Strategy ETF (NYSE:)
Finally, we will not forget that as in traditional investment, diversification is essential, and it will therefore be preferable to build a basket of several cryptocurrencies, rather than betting everything on Bitcoin.
Purchase of shares of cryptocurrency mining companies
For investors who do not want to buy cryptocurrencies but still want to take advantage of the potential of this market, it is possible to buy shares of Bitcoin mining companies, in order to bet on cryptocurrencies via the stock exchange.
Remember that Bitcoin mining consists of providing the Bitcoin network with computing power, in order to solve the equations necessary for the validation of transactions and securing the blockchain. In exchange, bitcoin miners receive newly minted bitcoin rewards.
Some of the best-known Bitcoin mining company stocks include Marathon Digital Holdings Inc (NASDAQ:), Riot Blockchain Inc (NASDAQ:), Canaan Inc. (NASDAQ:) or HIVE Blockchain Technologies Ltd (NASDAQ:).
Purchase of shares of cryptocurrency service companies
The best example of this type of action is the cryptocurrency exchange platform Coinbase Global Inc. (NASDAQ:). By buying this type of action, one obtains less direct exposure to cryptocurrencies, but more diversified. Indeed, while most crypto mining companies focus mainly on Bitcoin, buying a stock like Coinbase allows you to gain broader exposure to cryptocurrencies.
Additionally, Coinbase’s revenue, while influenced by crypto market trends, does not depend on the rise or fall of Bitcoin, but on the transaction volume on the platform. In addition, the company has begun to diversify its income beyond pure trading.
Finally, note that the current valuation of Coinbase stock looks attractive after several weeks of decline, with a Fair Value InvestingPro (summary of financial models) which stands at $98.61, which corresponds to a upside potential of more than 30%.