Many big-name investors have begun to warm up to Bitcoin (CRYPTO:BTC) as a store of value in recent years. Indeed, Fundstrat’s Tom Lee has pretty high hopes for the asset, with the belief that the leading cryptocurrency can top $200,000 before the end of the year. Indeed, such a move would imply north of 70% gains in three and a half months. Though there are several factors that could power such a sudden leg higher, I certainly wouldn’t punch my ticket to Bitcoin with such high expectations.
Ultimately, Bitcoin remains a speculative asset and should not be regarded as a safe haven, particularly since its correlation with stocks may intensify on the way down. And, of course, another “crypto winter” will likely arrive at some point, with a painful downside for those who aren’t yet aware of how low Bitcoin can go when the bear market regains control.
Maybe investors should own a little Bitcoin in the portfolio
In relatively small doses (think 1% or even 2% of the total portfolio), however, I think it’s worth dabbling in Bitcoin or even gradually building a position over time. Though I don’t think it’s a replacement for a risk-off asset like gold (the shiny yellow metal has been thriving of late, outperforming Bitcoin on a year-to-date basis with 36% gains versus 20% for Bitcoin), I do view it as a great risk-on asset for younger investors who are comfortable with higher risks for a shot at higher rewards.
Indeed, a small amount of speculation with money that one can afford to part with may not be the worst idea in the world, especially with cash that would have otherwise been spent on a nice-to-have discretionary good.
With the rise of crypto-related IPOs, the tokenization of equities, other intriguing blockchain projects, and the potential rise of the first hybrid ETF in the PENGU ETF that holds both cryptocurrency tokens and NFTs (Non-Fungible Tokens), there’s a lot to look forward to in the world of crypto. In any case, here are two top ways I’d look to get into the Bitcoin trade as the number of options to invest in crypto looks to swell further:
iShares Bitcoin ETF
For most new investors, I like the iShares Bitcoin ETF (NASDAQ:IBIT | IBIT Price Prediction) as a way to expose one’s portfolio to Bitcoin via a product that we’re probably all very familiar with: ETFs. Indeed, it’s as simple as buying any ETF or stock on the Nasdaq.
The IBIT keeps things simple and costs relatively low. It’s more convenient and easier to understand from a taxation perspective. While investing via a Bitcoin ETF may not be right for everyone, especially hardcore enthusiasts, I do view it as right for most investors who just want to dabble in cryptocurrency via a product that many are already so familiar with.
The IBIT ETF has attracted significant interest since its debut. If many investors feel underexposed to the asset, I view the IBIT as one of the go-to vehicles to pick up. It’s a simple, liquid, and just good enough for most prospective crypto investors.
Strategy
Strategy (NASDAQ:MSTR) is a levered way to bet on Bitcoin and stands out as a better fit for those who are as bullish on the crypto as someone like Tom Lee. Indeed, if Bitcoin doubles, MSTR stock would probably amplify that gain. Indeed, with a 3.83 beta, volatility will work in both directions, so investors should be aware of the steep swings to be had if another crypto winter were to hit us.
Shares are up 869% in two years, but are down 27% from all-time highs. If you believe the firm, which stands out as a “Bitcoin Treasury” company of sorts, is kicking off a trend that will see other firms and investors add a bit of Bitcoin to their balance sheet, perhaps MSTR is worth averaging into on the way down.
Bitcoin bulls who want something straightforward and more direct may wish to consider IBIT, while massive bulls with high hopes may wish to look at MSTR shares. Personally, I’d go with the former, given the volatility in MSTR is a bit too much for me to handle.
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