After the setbacks of the past few weeks, Bitcoin is becoming friendlier again. The cryptocurrency has recently reached a 6-week high again. In an interview, Julia Ebner, Head of Market Activation at ETP provider 21shares, explains how crypto ETPs work, how they differ from direct purchase of coins and why a savings plan could be a possible option for beginners.
The mood on the crypto market has recently brightened somewhat. After the significant setbacks of the past few weeks, Bitcoin has made up ground again. Especially in such market phases, many investors ask themselves how they can approach the topic of crypto without directly buying coins themselves, setting up wallets or having to set the perfect time to start.
One possibility could be exchange-traded crypto products that can be traded like classic securities. In an interview with finanzen.net, Ms. Ebner from 21shares explains who crypto ETPs could be suitable for, what the differences are to direct investments and why a savings plan could be interesting for some investors, especially in a volatile asset class.
Julia Ebner from 21shares in an interview
Ms. Ebner, Bitcoin and other digital assets are no longer just a niche topic. More and more investors are encountering crypto today through their brokers, stock exchange products and savings plan offers. Why do you think digital assets are becoming more of a focus now? And why does it make sense to consider Bitcoin as a small addition to your portfolio?
Cryptocurrencies are now much more accessible and are being offered by more and more banks and brokers. This also makes them interesting for private investors who want to broaden their portfolio. Even a small addition of Bitcoin can make sense because digital assets often react differently than classic investments such as stocks or bonds. This can help make the portfolio more balanced.
Many of our readers are with ETTF- Already familiar with savings plans. With crypto ETPs, on the other hand, the question is often how these products work exactly and who they are suitable for. What exactly is a crypto ETP? And why can a savings plan be particularly interesting for investors who want to approach a volatile asset class step by step?
A crypto ETP is an exchange-traded product that tracks the price of a cryptocurrency such as Bitcoin or Ethereum. Investors do not have to set up their own wallet or worry about secure storage – the provider takes care of that. A savings plan is particularly practical because smaller amounts are invested regularly. This allows investors to gain experience step by step and spread their risk over time instead of investing everything at once.
Anyone who deals with crypto for the first time is quickly faced with the fundamental question: buy the coin directly or invest via an exchange-traded product. In your opinion, what are the most important differences between direct investment in cryptocurrencies and an ETP – for example in terms of custody, tradability and suitability for everyday use?
When buying cryptocurrencies directly, you need a wallet, private keys and have to take care of security yourself. A crypto ETP, on the other hand, works more like an ETF or a share: it can be traded on the stock exchange, while the provider takes care of the custody of the underlying assets. This makes ETPs particularly attractive for private investors who want to easily integrate crypto into their existing portfolio.
Not every investor wants to commit to just one topic right away. Some people think of Bitcoin first, others see Ethereum as the more exciting technology case, and others would like to see a broader spread. Who is more suitable for a pure Bitcoin product and for whom is Ethereum more suitable? And when can a basket product be a more sensible entry point?
A pure Bitcoin product is suitable for investors who want to specifically bet on the best-known and most established cryptocurrency. Ethereum can be exciting for those who also have an eye on the technological approach behind smart contracts and decentralized applications. If you don’t want to commit, you can invest via a basket product that bundles several cryptocurrencies and thus offers a broader diversification.
After the recent setbacks, many investors are wondering whether they should continue to wait. How do you classify the ongoing correction? And why can a savings plan have advantages over a one-off investment, especially in a market phase like this?
Corrections are part of cryptocurrencies like other risk assets. A savings plan can help cushion these fluctuations: Investors regularly invest smaller amounts and thus automatically buy even in weaker market phases. This means you don’t have to try to catch the perfect entry point and can approach the market more gradually.
When beginners create their first crypto savings plan, similar mistakes often happen. In your opinion, what would be a sensible first step for someone who has primarily known ETFs or stocks?
The first step should be small and manageable. It is important to understand how a crypto ETP works and only invest money whose fluctuations you can tolerate. A regular savings plan can be a useful way to start because it helps to spread the risk over time and at the same time gain initial experience with the asset class.
These crypto ETPs could be suitable for a gradual entry:
Risk warning: Crypto investments and corresponding ETPs are highly volatile and can lead to significant losses or even a total loss of the capital invested.
