Should you invest in a crypto fund? investing in cryptocurrencies such as Bitcoin can be
a little intimidating, especially for someone who's getting started. And unfortunately,
many newbies end up falling for scams the likes of which you may be saying in the comment
section of this video. So many investors wonder whether it's best to invest in a cryptocurrency
fund or perhaps an ETF instead, so they don't have to deal with all the preparations that
come with smart cryptocurrency investing, like getting a crypto wallet or timing the
crypto market. My guest today is Kyle Woodley senior investing editor@kiplinger.com. And
then ETF enthusiast back on the show to walk us through his thoughts on crypto funds, how
they're different than a traditional ETF. And who should consider adding them to their
portfolio in 2021,
you can actually buy for instance, you know, in theory Bitcoin at say a 10% 20% discount,
but also in theory, you could buy it for a 10% or 20% premium, you in theory could buy
into it, Bitcoin could go up. But if this thing just starts trading at like less of
a premium and eventually discount, you might not actually realize any gains in Bitcoin.
Once we get a Bitcoin ETF that's probably going to trade much more faithfully to the
price of bitcoin and thus, is going to be sort of a more I guess, we'll say trustworthy
instrument for buying Bitcoin if that's the only way that you have available.
My name is Kiana Danial, I'm a best selling author and the founder of the invest diva
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the YouTube algorithm and share this with people who could benefit from taking control
of their financial future. Together, we can make this huge impact. Now let's go say hi
to Kyle Woodley.
Welcome back, Kyle to be invested in movement. We have another burning question for you from
our excellent writer members. They've been bringing up all these questions and you've
been just so awesome answering all of them. And we decided to make this into an actual
video. Because on YouTube people may be also asking, should you invest in the crypto fund?
Or an ETF or a Bitcoin find there are so many misconceptions about funds in cryptocurrencies
and who better to ask than Kyle but Lee because he's just an ETF. So, Kyle, welcome back.
It's great to be back.
So tell us are you invested currently in a crypto Oh,
yeah,
we gotta have jumped right into it.
Just please don't just don't even air this Now. Now. I don't want to confess it. So I
do. In fact, I am long. No, no, I'm joking. I'm joking. I'm just having it off for this.
I am long gbtc. So a lot of my friends are just going to jump on me for this. But I am
going to talk about this topic without actually talking about the virtues of Bitcoin or cryptocurrency.
I'm just going to talk about the tools of the trade here and sort of why they are moving.
So as you mentioned before, yeah, they're not the Bitcoin ETFs or the cryptocurrency
ETFs that are out there. The very first thing to know is that they actually technically
are not ETFs. They own funds, they work like funds, but there are slight differences. Rather
than trading on like an exchange like the NYC, ARCA or on the NASDAQ or the bad side,
I want to leave them out, they trade over the counter. Importantly, they're trusts Okay,
and the main difference that you need to know here is that these particular trusts can actually
trade up premiums or discounts to the net asset value. So with most most ETS, they're
pretty faithful to their net asset value if you go out and buy the value, the price that's
represented there that is very very close to the per share price of everything that
they they all you know, they mean like it's a very like you can have faith that you're
investing in that and that like it's properly price, but these funds they can actually go
with like extreme discounts like you can actually buy for instance, you know, in theory Bitcoin
at say a 10% 20% discount, but also in theory, you could buy it for a 10% or 20% premium.
So you pay a buck 20 for $1 with a Bitcoin and in fact with the grayscale Bitcoin trust
gbtc what again, what I'm long so with much embarrassment, I'm a horrible person, I'm
invested in cryptocurrencies, hey, I'm
the author of the
best nothing in cryptocurrency I suppose that
like you know, I'm Kiplinger. I'm supposed to be just, you know, like, buy and hold Warren
Buffett file dividends for life and it's like I occasionally I like to get in No, just
I'm a warren buffett gal as well. But I view cryptocurrency as a value asset, Warren Buffett
is just, you know, I love him. But again, he's, he's older and he doesn't want to get
out of his comfort zone and let him be like we are I I definitely have cryptocurrencies
in my portfolio. And I don't have the cryptocurrency fund in my portfolio to actually go with individuals.
So I would love to hear your opinion, because you are all about funds. And like, why did
you choose the fund as opposed to actual, like, individual cryptocurrencies? So that's
what I'm very interested to know. Yeah.
So the reason why you would invest in, say, the gbtc, or there's a newer one, it's the
ospreay Bitcoin trust, and that's obtc. And for what it's worth, there's also an aetherium,
one greyscale aetherium trust, and that's eth, G is that, let's say you don't want to
go to the trouble of opening a digital wallet. So a digital wallet is what you need to be
able to invest in cryptocurrency, you have to do it like, you know, basically like at
a place like Coinbase, or something like that. And frankly, I just, I don't want the complexity
of having a bunch of different accounts around my only account that I that I deal with, aside
from my 401k is my IRA. And that's it, I just want to keep it simple. And so my option at
the time was grayscale Bitcoin trust, literally it was because it was there. It's not perfect,
but it was there. And it has appreciated along with Bitcoin. The danger, of course, is again
in sort of this premium and discount thing, in theory, because of you know, because you
could say buy at a very high premium, you in theory could buy into it, Bitcoin could
go up, but if this thing just starts trading at like less of a premium and eventually discount,
you might not actually realize any gains in Bitcoin. The flip side is that if you buy
it at say, like a huge discount, and then all of a sudden that discount goes away and
it becomes a premium, you could just jet right by the price of bitcoin itself. The reason
why all of a sudden, you know, that's not as attractive as it once was, is because for
years people have been trying to file to create a Bitcoin ETF and the SEC just simply hasn't
allowed that to happen, or getting close. Canada recently approved, I believe two Bitcoin
ETFs I know they did one I think they might have led to through at least but once that
happened, like everybody's sort of set the clock was running, you know what I mean? Like
this is going to happen soon. Once we get a Bitcoin ETF that's probably going to trade
much more faithfully to the price of bitcoin and thus, is going to be sort of a more, I
guess, we'll say trustworthy instrument for buying Bitcoin, if that's the only way that
you have available. And so gbtc for most of its life is actually traded at a premium at
a very big premium, because people were really excited to buy bitcoin in any way that they
could. But lately that has actually turned into a discount. And I think the part of that
is out of fear that like when an SEC or when the SEC approves a Bitcoin ETF that like,
people are just gonna storm out of there, they're gonna get out of these trusts because
like these aren't nearly as good as the, you know, as the ETF product. So as far as whether
you should or not, I think part of that is just timing, which is to say like, should
you invest in it right now? And the answer is there are so many uncertainties with what
could happen to these trusts once an ETF is created. I mean, that alone whether or not
you even believe in cryptocurrency, that alone might actually be a deterrent. Once the SEC
approves an ETF however, that literally becomes if you believe in cryptocurrency, then that
is probably a pretty good way of doing it. There, of course, are reasons why you necessarily
wouldn't I mean, there are some people that really like hold, you know, faithful to the
idea that like, you know, cryptocurrency is a thing, like, it's not just that you want
to invest in it, but you actually want to hold on Hold it because you believe it will
become the currency, you'll actually want to go out and spend it. But if you simply
believe in this as a trend, which I do, then that's a good reason to say get into a Bitcoin,
you know, fine. One of the things that's lifting Bitcoin that I think is, you know, completely
legitimate, why I sit here and go, this is a good investment is that there's so much
institutional money starting to pour into it, there's, there's just so much interest
in it. Like, not only is there money pouring into it, but there's so many other institutions
that want to get into it and have telegraph that interested in. And if all of a sudden
you have that much more money pouring into it. Well, you have to expect pretty positive
things for the price, right? And so that's why I'm in it. It's a very small allocation,
because again, you know, this is this is a swing for the fences and so on, you know,
I'm trying not to go in overload on risk, but I do in fact, hold a small position because
I do believe that there's still plenty of upside.
Yeah, so again, thank you so much, because for bringing up rest, because at the end of
the day, you should only add any sort of asset including cryptocurrencies, whether it's funds
or Bitcoin or even if you're going to go for individual stocks or ETFs that we talked about
in the previous episodes. It has to go along with your risk tolerance, your financial situation
and your financial goals. Thank you so much, Paul for explaining this. And I'm sure a lot
of people who are completely intimidated by the thought of cryptocurrencies and that they
have to go and get a wallet and they have to have like it's a little bit more complicated
for sure than just going and buying a stock on Robin Hood on TD Ameritrade, you cannot
even buy and actually hold cryptocurrencies on Robin Hood, you can just position trade
them. So there's so many nuances that a lot of people are like, Okay, I'm just gonna go
on buy an ETF and then they would go and search crypto ETF on Google and they wouldn't even
know that it's different than a trust and it's not an actual ETF. So I think this is
incredibly valuable. Again, thank you so much for being back on the show. Thank you for
your time and people watching if you like this video, please go ahead and smash that
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I let you go after each episode, we're going to make a silly face. Yes, yes, you. Okay,
that was fast. Thank you for that.
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