Investors Buy Bitcoin and Ether Again
Bitcoin reached a new all-time high this week, topping by 23,642.66 on Thursday. Ether (or Ethereum) also arrived at levels not seen since the beginning of 2018. The press wrote a lot about the reasons. Many authors claim this crypto-bull-market differed from those of 2017. Because this time, institutional demand was the driving force. Small investors are less engaged this year–but they could enter the race soon.
Another difference compared with 2017 is there are many more crypto-investment products in the market. While the US authorities keep refusing to enable Exchange-Traded Funds (ETFs), the situation is better in Europe. Here you can buy Bitcoin and other cryptos through several types of securities. Like Exchange Traded Notes (ETNs), certificates, warrants.
We list some solutions right away. But first, we mention two stories that explain why it is useful to know the alternatives.
The Horror Story of the Lost Cryptocurrencies
Selling 0.33 Bitcoin in November 2017 was a terrible task for me, although I was happy with my gains. But being aware of the risks and security requirements, I spent some unpleasant hours trying to withdraw BTC from my offline “cold wallet” securely. And after that, sheltering the remaining amount for the future, again. I knew Bitcoin transmissions are irreversible. So with only a small mistake, you can lose it all. Or, also, if you get hacked in the process.
A sad story appeared in the press just this week:
User dawidkabani13 claims to have accidentally sent 4,005 Chainlink (LINK), $53,226 at the time of publication, to an Aavegotchi (GHST) smart contract on the Ethereum blockchain. Which does not support the token. The contract is immutable, his funds likely can’t be recovered. Even so, he is offering a 1,000 LINK reward to anyone willing to help. (Cointelegraph)
The Horror Story of Buying Bitcoin Far Overvalued
Due to the lack of Bitcoin ETFs in the US, the Grayscale Bitcoin Trust (GBTC) was the only alternative for many investors this year. (Grayscale also has Ethereum Trust, Bitcoin Cash Trust, and more.) The capitalization of this trust is an astonishing 16.8 billion USD.
The price of GBTC surged more this year than Bitcoin itself. Good news for holders. But this is bad news if you want to buy it now. One share of the trust closed at $28.25 on December 17, but the underlying Bitcoins were only $21.50 worth. A huge premium of 32 percent. (Imagine buying Apple at $170, instead of the actual $128.70.)
This premium can reverse in the future, for example, in the case of selling pressure. That can cause losses to investors. ETFs also often experience premiums or discounts to their NAV (net asset value). But the differences are mostly far lower.
Let us see other alternatives.
1. Buy Bitcoin ETNs in Germany
This year, the German financial authority (BaFin) approved various Bitcoin ETNs. First the product of ETC Group in June, later 21Shares in July and VanEck Vectors in November. I suppose after this bull market, much more funds are to come.
Exchange-Traded Products in Germany (with codes)
- BTCetc – Bitcoin Exchange Traded Crypto (BTCE or A27Z30)
- 21Shares Bitcoin ETP (ABTC or A2T64E)
- 21 Shares Ethereum ETP (AETH or A2T68Z)
- VanEck Vectors Bitcoin ETN (VBTC)
- 21Shares Crypto Basket Index ETP (A2TT3D)
- 21Shares Short Bitcoin (SBTC or 21XS)
- Bitcoin Group SE (ADE or A1TNV9) (since 2016)
- 21Shares AG OE.ZT.19(unl) ETP Bitcoin Cash (A2126N)
2. Buy Bitcoin, Ether ETFs in Sweden
You can buy cryptocurrencies with the ETPs (Exchange Traded Products) of the company XBT Provider since 2015. These assets are traded in the Nasdaq Stockholm securities exchange. They launched funds for Bitcoin, Ether, Litecoin, and XRP so far. All both in Swedish Crones (SEK) and Euros (EUR).
We mentioned the problem of premium or discount. You can compare the market value (exchange price) with the “fair value” (NAV) on their home page. I don’t see any significant difference at the time of writing.
3. Buy Bitcoin, Ether Certificates in Frankfurt, or Stuttgart
The German bank Vontobel Europe AG created a lot of crypto-certificates. The simple ones track the asset 1:1 (participation certificates):
- Bitcoin (VL3TBC)
- Bitcoin Cash (VL99BC)
- Ether (VF0ETH)
- Litecoin (VF0LTC)
- Ripple (VF7R1P)
- A crypto-portfolio of five assets (VE5CRY) (Bitcoin, Bitcoin Cash, Ether, Litecoin, XRP)
They have dozens of similar leveraged products (warrants), too, with extraordinary high risks. Other issuers of Bitcoin certificates in Germany are Morgan Stanley and Lang & Schwarz. (The search engine of the Frankfurt Stock Exchange seems to have periodic failures for years. A better information system has Boerse Stuttgart (Stuttgart Stock Exchange).
4. FinTech Bitcoin Buying (Paypal, Revolut, Robinhood)
The current cryptocurrency bull market began in October. Approximately the same days as Playpal announced broad cryptocurrency support. Users can buy and hold, spend cryptocurrencies, but can’t transfer them outside of the system. Bitcoin, Ethereum, Bitcoin Cash, and Litecoin are available.
You can buy Bitcoin and 9 other cryptos in Revolut, a popular FinTech mobile app in the United Kingdom and the European Union. No commissions apply. But I found a margin of approximately four percent between the buying and selling prices of BTC. The famous Robinhood application offers 7 cryptos in many US states. They plan to extend the service to more countries.
I found no such option on Transferwise.com or N26. I suppose more and more FinTech applications will make Bitcoin and Ether buying available in the next months and years.
5. Use BSDEX in Stuttgart
The Stuttgart Stock Exchange has a new system, the BSDEX (Börse Stuttgart Digital Exchange). They say it is “Made in Germany. Fair & professional.” And call it a transparent and low-cost solution. They have a smartphone application, “Bisonapp”, too.
Compared to other cryptocurrency trading platforms, this market is fully regulated, following German laws. The downside is that only four cryptos are traded. (BTC, ETH, LTC, XRP.)
6. Ether, Bitcoin in London, Paris, Zurich, Vienna?
- In Switzerland, I found a list of 10 Bitcoin ETPs (from 21Shares and Wisdom Tree).
- Other investments in the Swiss SIX system are 21Shares Crypto Basket Index ETP (with the funny ticker of “HODL”), 15 FiCAS Active Crypto ETP, and 21Shares Ethereum ETP.
- Some ETPs mentioned above are available in London, United Kingdom, too. Check the search page of LSE.
- Some products appeared this year also in Vienna (Wiener Boerse), like ABTC.
- I did not find any cryptocurrency products in the Euronext system (Paris).
7. You Can Buy Bitcoin Stock ETFs
Worth mention there are some stock market ETFs offering exposure to the blockchain sector. These US funds are holding stocks of companies operating a related business, benefiting from the success of the crypto-industry. Zacks mentioned three ETFs:
- Reality Shares Nasdaq NexGen Economy ETF (BLCN)
- Amplify Transformational Data Sharing ETF (BLOK)
- First Trust Indxx Innovative Transaction & Process ETF (LEGR)
But, as you see in chart 2, these funds lagged far behind Bitcoin price this year.
Related post: Cryptocurrency Fees Are Skyrocketing
External, US-related reading: Bitwise’s Crypto Index Fund Becomes Available to US Investors
ETNs and ETPs are subject to counterparty risk. ETNs and ETPs are considered riskier than ETFs. This post does not contain affiliate links. None of the mentioned companies supported this article.