Crypto Currency Investing Chapter 7 Summary: Three Things to Avoid

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The crypto market is volatile.

There’s no denying that.

Sure, you can get big wins, but that also means you can have catastrophic losses.

Only invest in crypto if you can handle it emotionally.

And for the love of god, stay away from the following three things.

ProShare’s BITO was the first Bitcoin ETF located in the USA.

The problem with it is that it does not directly invest in Bitcoin. Instead, it invests in Bitcoin futures using a rolling yield.

It’s a complicated system, but in short, it makes the ETF quite unstable and open to manipulation.

Bitwise Asset Management is the world's largest crypto index fund.

It claims to be like the S&P 500 of crypto, but it does not perform. It has a very high expense ratio (2.5%) and only trades on weekdays whereas the crypto trading market is open 24/7.

This means that if something happens over the weekend, which is common in the volatile world of crypto, the fund is left exposed until Monday.

Grayscale Bitcoin Trust was touted as the most liquid way to get exposure to crypto using your retirement account, such as your 401(k).

Although getting lower, this fund has a high management fee. At times you are buying bitcoin for less than its value, e.g., 80 cents on the dollar.

The bottom line is that it is always better to own Bitcoin directly.

Read the next chapter here.

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