Summary:
Bitcoin can be invested in directly or through businesses in the crypto economy.
The iShares Bitcoin Trust (IBIT) has over $22 billion in assets and a 0.25% expense ratio.
Using a Bitcoin ETF simplifies the investment process and reduces tax complications.
The Ark Fintech Innovation ETF (ARKF) offers exposure to Bitcoin-related businesses, including Coinbase and Block.
Consider your investment strategy: direct cryptocurrency investment vs. related business exposure.
When it comes to investing in Bitcoin and other cryptocurrencies, you have two primary avenues: buying the cryptocurrencies directly or investing in businesses associated with the crypto economy. Here, we explore two exchange-traded funds (ETFs) that provide exposure to Bitcoin without the need to purchase the digital currency directly.
Should You Buy a Low-Cost Bitcoin ETF?
One of the most significant Bitcoin ETFs is the iShares Bitcoin Trust (IBIT), which boasts over $22 billion in assets. This fund holds nearly 100% of its assets in Bitcoin, with Coinbase acting as its custodian. The fund aims to track Bitcoin's price over time, net of fees, and has a 0.25% expense ratio, which is relatively low for crypto ETFs.
Owning a Bitcoin ETF simplifies the investment process, as it minimizes the complexities and potential tax implications associated with buying and selling Bitcoin directly.
Invest in Bitcoin Innovation Instead
Another option is to consider an ETF that focuses on Bitcoin-related businesses, such as the Ark Fintech Innovation ETF (ARKF). This actively managed fund, led by Cathie Wood’s Ark Invest, offers exposure not only to cryptocurrencies but also to companies in financial technology and e-commerce. While it includes companies like Shopify, its significant holdings in Coinbase and Block (which has a strong connection to Bitcoin) make it a compelling choice. The fund's expense ratio is 0.75%, which is reasonable for a specialized, actively managed fund.
Which is Right for You?
It’s essential to note that you don’t necessarily need cryptocurrency exposure in your stock portfolio. However, if you believe in the ongoing adoption of Bitcoin and the cashless economy, investing in one of these ETFs could be a strategic move.
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