Today, I read an interesting article about how JP Morgan is calling ETFs with exposure to Bitcoin the “Holy Grail” for both owners and investors. There are several pieces to understand so let me touch on each one briefly.
First, ETFs are Exchange Traded Funds (follow the link for a full definition and explanation). These funds are similar to mutual funds but they do trade differently. Mutual funds typically have only one real price per day, calculated at the end of the day after the markets close, which is also when your buy or sell order goes through. ETFs’ prices fluctuate with the market; as their holdings rise and fall so does the price of the ETF. They also trade like stocks and may be bought and sold within the same trading day. They are traded just like stocks with a ticker on their respective exchange. My favorite thing about ETFs is that they are already diversified, so when you buy one share you are actually buying a variety of different shares or commodities.
Bitcoin, along with most cryptocurrencies, are traded differently than traditional stocks. In order to buy Bitcoin outright, you need a wallet at an exchange specifically for cryptocurrencies. Banks have been cracking down on these transactions (Bank of America recently banned all cryptocurrency transactions). This makes it much harder for the average investor (you and me) to get in on. ETFs that hold cryptocurrency don’t have that barrier to entry since they are traded like any other stock in the market and you can buy them today with your brokerage account.
On a final note, trading ETFs is much safer than trading on cryptocurrency exchanges since every asset in your brokerage account is covered by federally mandated insurance. This won’t protect you from the price of Bitcoin crashing, but it will protect you from fraud and theft that has plagued the crypto exchanges.
Through a few Google searches, I found 3 ETFs that have exposure to Bitcoin and had overall good reviews: ARKW, ARKK, and LIT. I decided to go with ARKW because it had the highest concentration of Bitcoin-related investments with 7% of the investment being in a Bitcoin fund. The images below show you how to find this info on Yahoo! Finance.
Search for the symbol you want, ARKW, select the “Holdings” tab and scroll down.
You will see the top 10 assets that are in this particular ETF. Notice several of these stocks are already part of my portfolio.
Now that I have found a fund to invest in, I made the following transactions within my E*Trade Brokerage account:
I sold all 1,270 shares of CVSI for $0.39 each, total cash from sale was $488.18
I sold all 1,500 shares of IGC for $0.79 each, total cash from sale was $1,177.84
I sold all 20,000 shares of MCOA for $0.03 each, total cash from sale was $590.65
The total net loss on these was $1,236.00. I decided it was better to get rid of the stocks that weren’t performing well and move into a fund I thought would do better. I don’t like losing money but I’m learning when to cut my losses and this money has a better chance of growing in this new fund than in those cannabis stocks.
I bought 48 shares of ARKW for $49.6712 each, total cost was $2,391.17
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