Crypto ETPs: What you should know before investing

Some investors often seek assets that exist outside of government control, especially when central banks are printing more money, which can make regular cash worth less.

Cryptocurrency (Crypto) has emerged as an alternative asset class, with some viewing bitcoin as "digital gold." This article explores why crypto is becoming more popular, whether it's a safe-haven asset, and how you can invest in it via exchange-traded products (ETPs). ETPs are investment vehicles that are listed on an exchange and can be bought and sold throughout the trading day like a stock, including exchange-traded funds (ETFs), exchange-traded notes (ETNs) and some other similar product types.

Takeaways:

● Crypto attracts investors as an alternative to traditional assets and for its volatility and potential appreciation.

● While speculative, some view crypto as a possible hedge against currency inflation.

● The SEC's approval of spot bitcoin ETPs and the government's plans to establish a bitcoin reserve have renewed interest in U.S. crypto investing.

1. How did crypto come about?

Crypto is a form of digital currency that uses blockchain technology. The first and most prominent cryptocurrency with the largest market capitalization is bitcoin, followed by ethereum (ether). Crypto's acceptance as a payment method remains limited.

Bitcoin emerged in 2008 during the global financial crisis, aiming to address perceived issues with traditional banking and financial systems.

Blockchain, the underlying technology, is a distributed ledger system maintained by a network of computers. It records transactions across the network all at once, making it virtually impossible to change or tamper with them.

Unlike regular fiat money, crypto works without a central bank running things, a concept known as decentralization. Some people like the idea of creating bitcoins through a process called mining, and they're interested in having money that isn't controlled by governments. This has contributed to bitcoin's increasing popularity among certain segments of the population.

2. Why are more and more people trading crypto?

Many investors see crypto as a different type of asset to traditional investments like stocks and bonds. Others are attracted by its changing prices and possible appreciation.

For instance, one bitcoin's price went from about $10,000 in early 2020 to over $100,000 in late 2024, with significant ups and downs along the way.

In recent years, crypto investing in the U.S. has reached two important milestones:

● In January 2024, the Securities and Exchange Commission (SEC) approved the listing and trading of spot bitcoin ETPs. This enhances the liquidity and credibility of bitcoin as an asset class, making it more appealing to different types of investors.

● In March 2025, the U.S. government announced plans to establish a bitcoin reserve and digital asset stockpile. This means the government may buy and sell crypto in the future, becoming an important part of the market.

3. Is bitcoin a safe-haven investment?

Some investors believe bitcoin may protect them against the inflation of fiat currencies, like "digital gold." This is because there's a limit on how many bitcoins can be created, and there have been no reports of its system ever being hacked.

Bitcoin is created through a process called "mining," and only 21 million can ever exist, potentially making it a deflationary asset. By the end of 2024, about 19.8 million had been created. The rate of new bitcoins slows down approximately every four years.

Traditional currencies, controlled by central banks, have been increasing in supply in recent years, pushing up inflation and the price of assets.

It's important to remember:

● Bitcoin and other cryptos are speculative investments.

● Prices can change a lot, up or down.

● Price changes are mostly because of people buying or selling, not because of "real value".

4. Investing in crypto ETPs

Crypto ETPs are a way for regular investors to get involved with crypto without dealing with wallets or crypto exchanges directly.

On moomoo, you can find crypto ETPs by going to Markets> ETFs> Heat Map> Crypto.

There are two main types:

● Spot crypto ETPs: These instruments actually hold real crypto, so their value changes more directly with the crypto's price.

● Crypto futures ETPs: These typically use futures contracts based on crypto prices. They may use various strategies, such as leverage or other advanced trading techniques.

Bottom line

Crypto ETPs help connect regular investing with digital money. They give investors exposure to crypto without owning it directly, a convenience for investors to consider.

Remember, all investments have risks, and crypto-related investments can be especially risky, as they don't have a clear value like many other investments. Crypto is not insured by the Federal Deposit Insurance Corporation or the Securities Investor Protection Corporation.

• Disclosure:

  Exchange-traded products (ETPs) are subject to market volatility and the risks of their underlying securities, which may include the risks associated with investing in smaller companies, foreign securities, commodities, and fixed income investments. ETPs that use derivatives, leverage, or complex investment strategies are subject to additional risks. The return of an index ETP is usually different from that of the index it tracks because of fees, expenses, and tracking error.

  Before investing in an ETP, you should read both its summary prospectus and its full prospectus, which provide detailed information on the ETP's investment objective, principal investment strategies, risks, costs, and historical performance (if any). You can find prospectuses on the websites of the financial firms that sponsor a particular ETP, as well as through your broker.

  Cryptocurrency ETPs are speculative and involve a high degree of risk. An investor may lose all or substantially all of an investment in the product. Cryptocurrency has historically exhibited high price volatility relative to more traditional asset classes, which may be due to speculation regarding potential future appreciation in value, among other factors. The performance of these ETPs should follow cryptocurrency prices closely, minus fees and the fund’s trading costs.

  Although hedging strategies seek to limit or reduce investment risk, they may also limit or reduce the profit potential. There is no assurance that hedging strategies will be successful.