Digital asset ETPs: Easy investor access to blockchain and crypto

Digital assets are fast becoming a major asset class. Blockchains like Ethereum and cryptocurrencies like bitcoin and ether draw headlines for the opportunities they offer investors. Cryptocurrencies alone have amassed a market capitalization that exceeds $2.3 trillion.¹ As investor access to digital assets expands rapidly, Invesco leads the way with our digital asset ETPs.

Investors are exploring the value that digital assets may add to their portfolios. But the idea of choosing from an ever-growing list of cryptocurrencies and navigating the potential risks associated with them may seem daunting. We make it easier for investors to access this growing space. 

Investing in digital assets: Three key questions to guide your journey

Here are three of the most common questions we hear from investors as they begin exploring digital assets: 

1. Why do people add digital assets to their portfolios? 

Potential opportunity: Digital assets are transforming the shape of economic activity. For example, more large and well-known companies are accepting bitcoin as customer payment and leveraging blockchain technology to streamline their operations. This growing adoption is one reason why digital assets may play a larger role in diversified portfolios.

Potential hedge against inflation: Many investors are attracted to bitcoin, for example, because that cryptocurrency has a finite supply; only 21 million coins can ever be mined. Governments can’t just print more of it, like a fiat currency. Because of this, digital assets with a finite supply in circulation may have the potential to hedge a portfolio against inflation, potentially like gold. Other cryptocurrencies, such as ether and tether, have an uncapped supply, which may not be a potential hedge against inflation. Investors should understand the individual digital assets and properly research them before investing.

Potential diversification: Digital assets may provide diversification for stocks, bonds, and other traditional assets. However, bitcoin's correlation with stocks has fluctuated over time. We would caution against drawing firm conclusions based on the historical data of such a relatively young, rapidly growing asset class.

2. Why are some investors hesitant to invest in digital assets?

Cryptocurrencies seem to make headlines nearly every day—both for positive and negative news. The volatile prices of bitcoin, ether, and other digital coins often reflect the unpredictability of the asset class’s fast-evolving news cycles. Other common pitfalls of cryptocurrency investing include forgotten private keys to access digital asset accounts, lost wallets where digital assets are stored, and expensive transaction costs.

Despite these valid concerns, investors can better understand their options. That starts with knowing the market and regulatory dynamics behind digital assets that create the potential upside. As ways to invest in digital assets continue to multiply, investors can better choose the right exposure for them.

3. How can you invest in digital assets?

Targeted exposure through direct investment: Direct ownership of cryptocurrencies through a major crypto exchange.

Indirect exposure via derivatives: Access to cryptocurrencies via derivative instruments (e.g. exchange-traded futures).

Broad exposure to the ecosystem: Access to companies that engage in cryptocurrencies and leverage blockchain technology.

Direct exposure via an exchange-traded product (ETP): Direct exposure, while helping to mitigate the risk of managing personal digital wallets and dealing with unregulated crypto platforms.

There are several ways to invest in digital assets. The most straightforward is to simply buy an actual cryptocurrency and hold it as an asset in your portfolio. Investors can also own derivatives, which are financial instruments whose value is based on the price of an underlying cryptocurrency. For example, certain investors can buy futures contracts on bitcoin. A futures contract lets them buy the underlying asset at a pre-determined future price that can be traded before the contract ends. This approach gives them exposure to the underlying digital asset without having to physically own it.

Cryptocurrencies themselves, however, are just one part of the potential economic value created by digital assets. Investors can also invest in companies that provide technology or tools related to digital assets, as well as companies that could benefit, either directly or indirectly, from blockchain or the shift to decentralized finance. Decentralized finance (also known as DeFi) describes a system in which financial transactions are made directly between buyers and sellers without the need for banks or other centralized financial institutions.

Creating diversified exposure to digital assets and the companies bringing them to life may seem challenging. Until now, investors have had to research and own individual stocks as well as a collection of cryptocurrencies or derivatives. However, that’s where ETPs come in. ETPs can expose investors to narrow or broad aspects of the digital asset ecosystem, all through well-known vehicles that are efficient to own and trade.

Invesco digital asset ETPs: Simplified access to unique opportunities

Blockchain, cryptocurrency, and other digital assets have broad implications across the global economy. At Invesco, we believe that investors should have an array of tools to easily access and create a diversified exposure to digital assets. That’s why we created the Invesco digital asset ETPs.

Invesco partnered with Galaxy and Alerian to develop four innovative strategies for accessing this transformative, emerging asset class.

Galaxy is a leading financial services innovator in the digital asset, cryptocurrency, and blockchain technology sectors and provides cutting-edge insights into investible opportunities across the digital asset ecosystem. 

Alerian is a pioneering index provider that has built innovative indexes that Invesco Digital Asset ETPs track.

Consider adding digital assets to your portfolio

Are you looking for investment opportunities related to cryptocurrencies or exposure to the broader blockchain ecosystem? Invesco offers ETPs that can give you simplified access and diversified exposure to digital assets in one fund.

• Invesco Galaxy Ethereum ETF (QETH)
  Provides investors with direct exposure to ether — Ethereum's native currency — with increased transparency, liquidity, and oversight.

• Invesco Galaxy Bitcoin ETF (BTCO)²
  Designed to help investors get convenient exposure to the world’s largest cryptocurrency.

• Invesco Alerian Galaxy Crypto Economy ETF (SATO)
  Targets key segments of the crypto economy—miners, enabling technologies, buyers and crypto trusts, and exchange-traded products.

• Invesco Alerian Galaxy Blockchain Users and Decentralized Commerce ETF (BLKC)
  Accesses same key segments as the Invesco Alerian Galaxy Crypto Economy ETF (SATO), but adds exposure to companies that use blockchain technology.