iShares Bitcoin Trust ETF: Buy, Sell, or Hold?

So you’re thinking about buying some Bitcoin (CRYPTO:BTC), but you’d rather treat it like a traditional stock. Opening an account with a crypto-trading service seems like a pain and a security risk. Fortunately, there are several exchange-traded funds (ETFs) on the market today that will allow you to track the price of Bitcoin in a stock-like security.

The most popular Bitcoin ETF by far is the iShares Bitcoin Trust ETF (NASDAQ: IBIT). This fund comes with the strong financial backing of investment management giant BlackRock and the familiar name of the iShares family of funds.

The iShares fund is a reputable investment option for both new and experienced crypto investors — but is it the best Bitcoin option for you right now? Let’s take a look.

Basics of Spot Bitcoin ETFs

Spot Bitcoin ETFs opened up the crypto market to several new types of investors in January 2024. For example, individual retirement accounts (IRAs) and 401(k) plans rarely come with crypto trading services. Institutional investors prefer the regulated nature of ETFs over the looser rulebook for direct crypto investments. The new ETFs have made Bitcoin investments easily available to accounts with limited asset type selections.

The new asset class adds some traditional stability and regulatory certainty to the newfangled field of investing in digital assets. So if you’re looking to add some Bitcoin exposure to your retirement portfolio, ETFs have made the idea easily accessible.

How does the iShares ETF stand out?

iShares Bitcoin ETF has several investor-friendly features:

The fund charges a modest annual sponsorship fee of 0.25%, with the introductory fee rebate ending in January 2025.

The brand recognition of the iShares family of funds is hard to beat. Three of the top 10 ETFs in the market today are named after iShares, and each manages more than $100 billion in net assets.

iShares funds are popular for good reason. With BlackRock’s deep pockets backing the fund family, investors don’t have to worry about the financial future of each ETF.

The new Bitcoin fund is already a popular choice in the iShares portfolio. With over 1,400 funds under management at iShares, the Bitcoin fund is the 30th largest with $21.1 billion in cryptocurrency assets under management.

Popularity can be a real advantage. High trading volumes result in a narrow spread between bid and ask prices, giving investors a more accurate real-world price than less popular funds with wider bid spreads.

It’s not always a clear leader in every area. For example, the ARK 21Shares Bitcoin ETF and Bitwise Bitcoin ETF offer slightly lower fee rates. The Vanguard family of funds is arguably more reputable than iShares, but I don’t expect John Bogle’s company to enter the crypto space anytime soon.

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Some may prefer the much lower fees found elsewhere, the brand value of famed growth investor Cathie Wood behind the ARK 21Shares option, or Bitwise’s strategy of investing a portion of its management fees into Bitcoin developer organizations.

But overall, the iShares fund is the clear leader in this space in terms of investor interest, and there’s nothing wrong with that. It’s a solid ETF managed by a reputable firm, and fees are within a rounding error of Bitwise’s optimal 0.20% rate.

Image source: Getty Images.

Alternative Bitcoin investment strategies

You can always just grit your teeth and buy Bitcoin directly. This may mean opening a new account at an unfamiliar financial institution, sharing financial data like your bank account number (to fund the new account), and learning the intricacies of a different trading system. What’s more, crypto exchanges like Coinbase (NASDAQ: COIN) and Robinhood (NASDAQ: HOOD) add fees to Bitcoin purchases, either directly or in the form of a small adjustment to the cryptocurrency price. ETF trading is typically free these days.

Still, you may prefer the real ownership of the digital currency. Bitcoin could eventually become a useful medium for day-to-day transactions, and an ETF won’t help you do that. And of course, even giants can fall: BlackRock is unlikely to go bankrupt anytime soon, but I can’t pretend the risk is exactly zero. Those purchase fees I mentioned for direct Bitcoin purchases may not seem appealing at first, but they add up to at most 5 years of annual ETF fees.

You can always take a less direct route into the crypto market. Coinbase and Robinhood are leading crypto exchanges, as well as interesting stocks to own in their own right. Enterprise software developer MicroStrategy (NASDAQ: MSTR) has essentially turned itself into a Bitcoin fund of sorts, investing most of its cash in the cryptocurrency and adding more over time. Bitcoin miners like Marathon Digital Holdings (NASDAQ: MARA) and Riot Platforms (NASDAQ: RIOT) also have long-term confidence in Bitcoin’s price. In short, there are many ways to add some Bitcoin exposure to your stock portfolio, and each comes with a different level of market risk and potential reward.

Should you buy, sell or hold the iShares Bitcoin ETF?

If you’ve read this far, I assume you’re interested in investing in Bitcoin. If so, the iShares Bitcoin ETF offers a convenient path to indirect Bitcoin ownership with modest fees and a solid financial platform.

Overall, I think every investor should have some exposure to Bitcoin and other cryptocurrencies these days. I can feel the buzz of a digital revolution in the old-school banking system, payment services, etc. It would be a shame to watch this sea change from the sidelines with nothing in play.

The iShares ETF may not be my personal favorite, but it’s definitely on the short list of funds that deserve further investigation. If you already own it, the iShares Bitcoin ETF is a solid long-term holding. If not, it could be a worthwhile buy right now as we wait for the price-boosting effects of the recent Bitcoin halving and wider consumer adoption of cryptocurrencies.

Honestly, I can’t think of any reason to sell the iShares fund today unless you think Bitcoin has already peaked and will fall further from here. I don’t think that’s true, but your vision may be different.

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Anders Bylund has positions in Bitcoin, Bitwise Bitcoin ETF Trust, and Coinbase Global. The Motley Fool has positions in and recommends Bitcoin and Coinbase Global. The Motley Fool recommends Nasdaq. The Motley Fool has a disclosure policy.

iShares Bitcoin Trust ETF: Buy, Sell or Hold? originally published by The Motley Fool