Bitcoin (CRYPTO: BTC) is having a moment. After starting 2024 off with a bang, the cryptocurrency delivered disappointing performance from March through September. Now, Bitcoin is reaching new heights after rocketing up nearly 80% in the last three months.
Although the exact mechanisms of any run are never entirely clear, the recent rise in Bitcoin's price appears driven -- at least in part -- by Trump's election. The incoming administration is viewed as very crypto-friendly and is expected to take a gentle approach to regulating the industry. On the campaign trail, Trump himself said he intended to make the U.S. the "crypto capital of the planet."
How an administration chooses to regulate or not regulate a market has big implications. The strong effect government actions have on the Bitcoin market was made clear at the beginning of this year when the Securities and Exchange Commission (SEC) approved spot Bitcoin ETFs. The cryptocurrency rose 85% in just six weeks.
So, if you have $2000 that you'd like to invest in Bitcoin, what's the best way to gain exposure? You can always buy the asset directly, but spot Bitcoin ETFs are a great alternative. Here's my vote for the smartest option.
Bitcoin ETFs are a big deal
Let's face it -- despite its meteoric rise and trillions of dollars of investment, many are still wary of Bitcoin. They see it as an inherently risky asset mired in controversy. Can you blame them? Three years ago, FTX plastered its name on Miami's NBA arena, purchasing the right to do so in a $135 million deal. Just a year later, the exchange imploded in spectacular fashion, and with it, almost $9 billion in customer assets were lost.
Now, the distinction between a private exchange and Bitcoin itself is important. The integrity of the Bitcoin and the Bitcoin network was not compromised in any way. It was simply a case of fraud and mismanagement from a private entity. Nevertheless, stories like this keep many people out of the market. It's why the approval of spot Bitcoin ETFs is such a big deal. These ETFs carry with them a stamp of approval from the SEC. They give more traditionally minded investors access to Bitcoin through a regulated security, one they can trade through a normal brokerage.
Spot Bitcoin ETFs help build trust, signaling to investors that the market has matured and that it is safe. Ultimately, it means that a wider swath of investors is willing and able to enter the market.
Spot Bitcoin ETFs abound
When they were approved, capital came flooding into the market. It took just 211 days for Blackrock's offering to reach $40 billion in assets under management (AUM), setting the record for the quickest ascent to that level in ETF history. The previous record was 1,253 days.
There are a lot of spot Bitcoin ETFs at this point -- too many for an exhaustive list. Here are the top five by AUM.
- iShares Bitcoin Trust ETF (NASDAQ: IBIT)
- Grayscale Bitcoin Trust ETF
- Fidelity Wise Origin Bitcoin Fund
- ARK 21Shares Bitcoin ETF
- Bitwise Bitcoin ETF Trust
With all the options available, what's the best one? If I had to pick, it would be the iShares Bitcoin Trust ETF. The truth is that the differences here are minor; all of these are solid. However, the iShares ETF is the most liquid of all. It is managed by Blackrock, one of the world's most trusted asset management companies, and it is one of the lowest-cost spot Bitcoin ETFs. Blackrock works closely with Coinbase to ensure it is using the best custodial security available. All of this adds up to what is, in my eyes, the best spot Bitcoin ETF on the market.
Should you invest $1,000 in Bitcoin right now?
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Johnny Rice has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bitcoin and Coinbase Global. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
