Bitcoin (CRYPTO:BTC) prices have fluctuated quite wildly in recent sessions amid the escalating situation going on in the Middle East. Undoubtedly, top cryptocurrencies, like Bitcoin, may still be viewed as a safe haven asset by some. Some crypto fans who’ve warmed up to the asset in recent years may think Bitcoin is like some kind of digital gold.
Undoubtedly, Bitcoin may trade like gold on some days. And while it may have a rather limited correlation to the broader equity markets, I wouldn’t yet treat Bitcoin or any other cryptocurrency, for that matter, as a suitable alternative for gold. Of course, only time will tell if Bitcoin trades can act more like the yellow metal in the future.
Bitcoin doesn’t shine quite like gold.
Either way, a portfolio seeking some safe haven may wish to stick with gold rather than Bitcoin, as Bitcoin tends to feel the same sinking feeling that your average stock does when financial markets go into a meltdown.
Recent history suggests correlations between gold and Bitcoin are somewhat inconsistent, especially when the going gets tough. Arguably, it makes sense to view Bitcoin not as a gold replacement or supplement but as its own unique asset class.
It doesn’t quite trade like gold, but it also doesn’t match stocks move for move. While it can help diversify portfolios further, investors must acknowledge that adding a large position in Bitcoin may add risk and amplify volatility.
Key Points About This Article
- Bitcoin hasn’t really proven itself as a suitable gold alterative, at least not to date.
- For those seeking upside, though, a Bitcoin ETF can be an easy way to bet on the popular crypto.
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Bitcoin isn’t gold. But it can be a great bet, regardless.
Just because Bitcoin and its ETFs aren’t strong alternatives for gold does not mean they can’t be a good investment. If you understand how Bitcoin works and won’t be afraid once an inevitable downturn happens (you should seek to buy more on weakness), Bitcoin can be a great alternative investment that spices up your portfolio.
Given gold is at a new high and Bitcoin is off close to 20% from its peak, Bitcoin may be the more appealing option to those seeking to explore alternative asset classes.
Undoubtedly, it’s quite inconvenient to start your own cryptocurrency wallet. That’s why opting for Bitcoin ETFs can make more sense. It’s essentially like buying any other ETF on your local brokerage. You don’t really need to wander too far out of your comfort zone to gain Bitcoin exposure.
Of course, you should pick an ETF from a trusted provider and ensure the management fees are low enough not to eat away at your returns over time. Here are two of my favorites:
iShares Bitcoin Trust
When it comes to ETFs, iShares is a gold standard. In that light, the iShares Bitcoin Trust (NASDAQ:IBIT) is easy to reach for, given the reputable firm standing behind it and the incredibly low 0.12% expense ratio that will last for a limited time (it’ll likely rise to 0.25% next year). Not to mention that IBIT is one of the cooler-sounding Bitcoin ETF tickers out there!
Either way, the iShares Bitcoin offering sets a very high bar that could prove tough for rivals to keep up with. It’s one of the most established Bitcoin ETFs and one that is in my top spot for investors seeking quick and easy exposure to digital assets.
VanEck Bitcoin ETF
VanEck is another massive name in the investment world, and it’s every bit as reputable as iShares. The VanEck Bitcoin ETF (HODL) is another new ETF on the block with a ticker symbol that’s sure to garner attention among meme stock investors. At the time of writing, the ETF boasts a competitive expense ratio of 0.2%, which will be waived for a limited time, pending specific conditions.
Either way, the HODL ETF stands out as having more competitive pricing than IBIT, at least for now. While the 0.05% difference is really a drop in the bucket, I do think that such a small amount is enough to draw in significant inflows from retail investors.
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