The news those suffering from Crypto FOMO have been waiting to hear has broken – the blockchain phenomena has gone mainstream and now has its own ETF.

That means investors can now spread their risk, and it may be the start of much more general trading in this area, where returns have been huge – and so have the falls. 

According to the Financial Review, the first test of mass Australian retail demand for crypto will happen next week on the Cboe equities trading venue. The paper reports there is speculation $1 billion will flow into the country’s first bitcoin ETF.

The only bitcoin ETF product in front of ASX Clear at the moment – the Cosmos Asset Management bitcoin ETF – can start trading on the Cboe on April 27.

That said, BetaShares,  popular ETF trading platform, is offering an ETF which is essentially a bundle of companies with exposure to the digital asset eco system but not necessarily pure plays.

“An investment in CRYP should be considered very high risk. CRYP provides focussed exposure to companies involved in servicing crypto-asset markets or which have material investments in crypto-assets,” says a warning on the BetaShares website.

“Crypto-assets are highly speculative in nature and companies with significant exposure to crypto-asset markets can be expected to have a very high level of return volatility. An investment in CRYP should only be made by investors who fully understand the features and risks of such companies or after consulting a professional financial adviser, and who have a very high tolerance for risk and the capacity to absorb a rapid loss of some of their investment.”

Investment guru  Mark Carnegie says that while there are no certainties in investing, but a modest investment in crypto can give you the diversity you want from your investments.

Before you invest there are four rules you need to follow:

  1. Your brain will get you 10 times as much profit as your money.
  2. Open a crypto account today.
  3. Split your money into pieces and invest a small piece each quarter.
  4. Don’t invest more than you can afford to lose because crypto is still a risky investment.

All investments have their own set of risks but fans say a modest investment in crypto made over many years will help you diversify your investment portfolio. 

It isn’t without its risks though and to really maximise your potential investment return, you need to start investing with a clearly defined strategy.

MH Carnegie’s, Mark Carnegie warns that crypto is hugely overpriced unless it can achieve at least one of the following:

  • Insurance against a full monetary meltdown just like gold
  • Fintech and labour force management investment that disrupts the global financial and labour services
  • An ecosystem in which NFTs have use-value as a new type of functional good.

Mr Carnegie says that even if crypto fails, understanding the asset class will help you manage your portfolio to avoid the disruption. 

Mr Carnegie holds the view that while he has a number of sleepless nights he figures that in 2022 and 2023 there is a risk wherever he puts his money – but crypto offers much better returns so it is worth the risk.

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