Bitcoin (CRYPTO: BTC) has surged to an astonishing new peak above $100,000, yet many remain cautious about diving into cryptocurrency. This market is infamous for its fluctuating prices, which can change dramatically within a single day.
The iShares Bitcoin Trust is one of nearly a dozen spot Bitcoin ETFs that debuted at the start of the year. As part of the iShares lineup from BlackRock, it’s simple to buy and sell just like any other iShares ETF.
This fund invests solely in Bitcoin, differentiating it from other ETFs that typically hold various assets. Its focused approach simplifies investing by giving you direct exposure to Bitcoin via the spot market.
This convenience means you don’t have to navigate creating a blockchain wallet or remembering complicated keys, making it accessible for newcomers to the crypto space.
Why Choose Bitcoin Over Multiple Cryptocurrencies?
You might wonder why to focus on Bitcoin instead of branching out into a mix of cryptocurrencies. The clear answer is the dominance of Bitcoin in the overall crypto marketplace; it comprises a staggering 55% of the market cap.
This essentially means that even among thousands of cryptocurrencies, gaining exposure to Bitcoin alone offers significant market representation.
Image source: Getty Images.
Currently, Bitcoin and Ethereum are the only cryptocurrencies permitted for purchase in spot market ETFs. If ETFs aim to follow other cryptocurrencies, they rely on a mix of financial derivatives which can generate tracking errors and lead to higher costs.
Although this may change as cryptocurrencies gain more mainstream acceptance—like with Coinbase Global (NASDAQ: COIN) launching the Coinbase 50 Index—U.S. regulatory approval for financial products to track that index has yet to be granted.
Consistent Tracking of Bitcoin’s Value
Over the past decade, Bitcoin has proven to be one of the top-performing assets globally. While it experiences volatility and downturns periodically, long-term trends showcase its strong performance.
For instance, from 2011 to 2021, Bitcoin yielded annualized returns of 230%, vastly outperforming the next best asset class, tech stocks, which returned only 20%. This track record suggests a preference for investment products that closely match Bitcoin’s price movements.
Bitcoin/U.S. dollar chart by TradingView.
The chart above illustrates that the iShares Bitcoin Trust closely aligns with Bitcoin’s price fluctuations. The blue line shows Bitcoin’s movements, while the red line tracks the ETF’s changes. Despite inherent tracking errors, this ETF performs effectively, maintaining precise alignment since its launch in January.
With its low costs, effective management, and transparency, the iShares Bitcoin Trust stands out as a solid option for gaining Bitcoin exposure. It is as straightforward to trade as any ETF and provides a nearly 1:1 correlation with Bitcoin’s long-term price trajectory. For those new to cryptocurrency, it represents an excellent opportunity.
Seize This Opportunity Before It’s Too Late
Do you ever feel as though significant investment opportunities have passed you by? If so, pay attention.
Our analysts occasionally issue a “Double Down” recommendation for stocks they believe are poised for growth. If you think there’s no chance left to invest wisely, now could be your best moment. Consider these notable examples:
- Nvidia: A $1,000 investment when we doubled down in 2009 would now be worth $356,125!*
- Apple: A $1,000 investment from 2008 would be worth $46,959!*
- Netflix: A $1,000 investment from 2004 would now total $499,141!*
We are currently issuing “Double Down” alerts for three promising companies, and this may be one of your last chances.
See 3 “Double Down” stocks »
*Stock Advisor returns as of December 9, 2024
Dominic Basulto has positions in Bitcoin and Ethereum. The Motley Fool has positions in and recommends Bitcoin, Coinbase Global, and Ethereum. The Motley Fool has a disclosure policy.
The views expressed herein are solely those of the author and do not necessarily represent those of Nasdaq, Inc.
