How to invest in cryptocurrencies on the Stock Exchange?

The request of many investors has been answered: it is now possible to invest in cryptocurrencies on the Brazilian Stock Exchange. If this scenario was impossible some time ago, today, through an ETF, it is possible to take advantage of the virtual currency market in a safer way. Therefore, in this content, you will find out how to invest in cryptocurrencies at B3.

We can already say that investing in cryptocurrencies is one of the preferred paths for investors when deciding where to invest their money. After all, in recent years, cryptocurrencies have gained relevance in the market and entered the radar of many people around the world.

On the other hand, for many people, this market is still considered complex. However, as a way to facilitate this path for many Brazilians, in 2021, the first ETF referenced to cryptocurrencies debuted on B3: the HASH11 ETF. After that, another cryptocurrency ETFs also debuted in Brazil.

To simplify and show you how to invest in cryptocurrencies, in this content you will understand from the concept to the necessary steps to make this investment. 

What you will find throughout this content:

• What are cryptocurrencies?
  
  What are the most valued cryptocurrencies on the market?
  How cryptocurrency ETFs work.
  What is the minimum amount to invest in cryptocurrencies?
  How to invest in cryptocurrencies: step by step
  

  Risks of investing in cryptocurrencies

Here's what you need to know to invest in cryptocurrencies

Before we present the step-by-step guide for you to understand how to invest in cryptocurrencies on the Brazilian Stock Exchange, it is necessary to present the concepts behind these coins and also clarify some questions that always arise. 

What are cryptocurrencies?

Cryptocurrencies are digital assets traded and produced from cryptography. The technology behind the trading of this virtual money is called Blockchain which consists of a database where details about transactions involving these crypto assets are stored. 

Cryptocurrencies emerged to be decentralized virtual money, that is, without connection with financial institutions and the Central Bank. The popularization of these assets is related to the ability of transactions to happen instantly and without intermediaries.

But don't worry, in this article we will show you a way to invest in cryptocurrencies more easily and securely, counting on the regulated market of ETFs.

What are the most valued cryptocurrencies on the market?

When we talk about cryptocurrencies, the first name that crosses the minds of investors is Bitcoin. However, other alternatives are also popular and valued in the virtual currency market. 

• Bitcoin: This cryptocurrency was created in 2008 in a way considered mysterious. What is certain is that it is a programmer, or group of programmers, who use the pseudonym of Satoshi Nakamoto. 

• Ethereum or Ether: this is the cryptocurrency of the Ethereum platform, founded in 2013 by programmer Vitalik Buterin. It is considered the second-largest virtual currency in the world, behind only Bitcoin.

How does the cryptocurrency ETF work?

Before talking about cryptocurrency ETFs, let’s quickly explain what an ETF is. Exchange-Traded Funds (ETFs) are Investment Funds that have portfolios that follow a reference index, such as the Ibovespa and the S&P 500. In the case of HASH11, for example, the Fund chosen is the NCI or Nasdaq Crypto Index.

Other cryptocurrency ETFs available on B3 are:

• BITH11

• ETHE11

• QBTC11

• QETH11

In this way, investing in this ETF is a way to invest in the main cryptocurrencies on the market. To make it even easier, this entire process is carried out through the Stock Exchange, which, unlike direct investment in crypto-assets, manages to regularize the trading of ETFs.

Do you want to understand more about the Stock Exchange and all the opportunities that are available in this market? Click on the link below and see free lessons from THE Stock Exchange courses at Toro Investimentos. 

What is the minimum amount to invest in cryptocurrencies?

The minimum amount to invest in cryptocurrencies is another issue that always appears in doubts about these assets.

 

As with other investments, there is no detailed minimum amount to make this investment. In the case of direct investment, via exchanges, some determine minimum values, however, there is no rule.

As for investing in cryptocurrencies through the ETF, the minimum amount depends on the price and trading of this asset. To give you an idea, during the first half of 2021, the minimum amount to invest in HASH11 was between R$35 and R$55.

How to invest in cryptocurrencies safely?

Now that the concepts about cryptocurrencies are clarified, we can move on to the next step and present the step-by-step for you to know how to invest in cryptocurrencies safely.

 

However, it is necessary to emphasize that this type of investment presents risks. However, the fact that the Stock Exchange offers a cryptocurrency ETF allows for a safer alternative, after all, it has all the security of B3, in addition to the bodies responsible for regularizing this market.

In addition, even with all the optimistic views of the market concerning the virtual currency market and also with the very positive recent performance of cryptocurrencies such as Bitcoin, the maxim we always repeat is worth it:

Past performance is not a guarantee of future income.

Therefore, before investing in cryptocurrencies, or any other asset, understand your investor profile, plan well and seek knowledge so that you know exactly what you are doing. 

With that in mind, here’s how to safely invest in cryptocurrencies through the Stock Exchange. 

How to invest in cryptocurrencies: step by step

The good news is that to invest in cryptocurrencies on the Stock Exchange you need to follow the same steps necessary to invest in stocks. See how easy it is:

Step 1: Open your account with a stockbroker

The first step to investing in the cryptocurrency ETF on the Stock Exchange is to open an account with a  stock exchange  The only necessary observation is to choose an institution that allows investment in these assets. 

In addition, it is worth considering the one that offers a good investment experience, either in terms of ease of investing or even in terms of the costs of making such an investment.

Here at Toro, you have the simplest way to invest in the stock market and you also don't pay a brokerage fee to invest in this market. 

Step 2: Send money to your account

With your account open, the second is to send money so you can choose the assets to invest your capital. Nowadays, it is possible to carry out this process through bank transfer, via DOC or TED, which contributes to the agility of the process.

Step 3: Choose the Cryptocurrency ETF

After following the previous two steps, simply access your broker's platform, choose the asset you are interested in and define how many assets you are going to buy. Here at Toro, you carry out this entire process with just a few clicks and have access to detailed information about your investment.

To make this investment even easier, watch the video we prepared showing how to invest in ETFs here at Toro:

Risks of investing directly in cryptocurrencies

As we said, the step-by-step shown above represents how to invest in cryptocurrencies through the Stock Exchange. However, you can also directly trade these currencies, however, you need to know that you will be taking more risk. In the end:

For you to understand better, we have separated the 3 biggest risks of direct investment in cryptocurrencies. 

1. Investment not regulated by a Central Bank

As we said, digital assets were created not to depend on a central bank, so there is no regulation on their nature or operations. In this way, even though they are sold here in Brazil, they are still not regulated by anybody, so the risk is left to the holders.

2. Possibility of a financial bubble

Many investors invest in just one cryptocurrency and get a high return. However, the growth in demand for a specific currency can trigger a financial bubble, and if it bursts, many investors can suffer losses. 

The solution to this is diversification. When investing in an ETF you choose an asset that depends on the appreciation of some crypto assets. In this way, the appreciation of one can offset the devaluation of the other. 

3. Lack of ballast

Still, on the safety of direct cryptocurrency trading, there is no way to prove the real value of this asset. Therefore, when relying on the regulation of an ETF, you have a detailed history of the trades involving this asset. 

In addition to these risks, we need to remember that the crypto market is highly volatile. Therefore, you must have a diversified portfolio respecting your risk profile, considering investing in other ETFs, Fixed Income securities, shares, BDRs, and  Real Estate Funds, for example. 

How important is diversification when investing in cryptocurrencies?

The last chapter of this content is perhaps one of the most important. This is where you find information that no one usually tells you, but which, in practice, is responsible for getting you closer to the result you expect. 

It is about the need to diversify your investments. In practice, we can say that it is not putting all your eggs in one basket and thus ensuring that, if it falls, you lose everything you own.

Especially when we look at all the possibilities that the Stock Exchange offers, it is possible to find more than one alternative to invest your money and build a diversified portfolio that does not depend on a single asset. 

Therefore, we can say that a cryptocurrency ETF allows you to invest in the virtual currency market and be able to balance it with other assets. Did you like this way of investing in cryptocurrencies?

Click on the link below, open your account free and start exploring this and other opportunities available on the Exchange.