Is the iShares Bitcoin Trust a Millionaire Maker?
Most investors have certainly heard about Bitcoin by now. The world’s first and most valuable cryptocurrency has skyrocketed in price. It’s up 956% just in the past five years, outperforming major stock indexes.
This impressive track record easily grabs the attention of the investment community. However, some open-minded investors might still be hesitant to own Bitcoin directly. Luckily, there’s a popular exchange-traded fund (ETF) offered by massive asset manager BlackRock that might be just what you’re looking for.
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I’m talking about the iShares Bitcoin Trust (NASDAQ: IBIT). Can this ETF be a millionaire maker?
Bitcoin’s welcome party
In January 2024, history was made. The Securities and Exchange Commission finally approved the trading of spot Bitcoin ETFs. A seminal moment in Bitcoin’s history, this was a clear sign that regulators viewed the digital asset as a legitimate financial instrument.
Seeing the huge demand there would be to gain exposure to Bitcoin, asset managers didn’t take their time before jumping into the waters. BlackRock’s iShares Bitcoin Trust quickly became the most popular product on the market. After months and months of strong capital inflows, as of this writing, it holds $59 billion worth of Bitcoin.
The political backdrop has become more favorable for Bitcoin. President Donald Trump has said he wants to create a Bitcoin strategic reserve. He also wants the U.S. to support mining activities. It’s also worth noting that Treasury Secretary Scott Bessent owned the iShares Bitcoin Trust before having to divest it for any possible conflicts of interest. Bitcoin has infiltrated Washington and Wall Street, which makes it a less risky bet than ever before.
Image source: Getty Images.
A more convenient way to play
To be clear, investors must be bullish on Bitcoin if they want to buy the iShares Bitcoin Trust. The facts that the cryptocurrency is decentralized (not controlled by any single entity) and has a fixed supply cap of 21 million coins are wonderful characteristics.
Since the Great Recession, governments have borrowed more and more to fund their fiscal deficits. Even the U.S., the world’s economic superpower, has been financially irresponsible. Viewed in comparison, it makes sense why more people are interested in Bitcoin.
The purest way to gain exposure to Bitcoin is by buying it directly on a crypto exchange, like Coinbase Global, before transferring it offline to a cold wallet. This method does require a bit of a time commitment to learn how to technically do everything properly. However, it allows individuals to take more control of their holdings.
Here’s why the iShares Bitcoin Trust has been extremely popular. It provides a regulatory-compliant, convenient, and safe way to gain exposure to Bitcoin without all that hassle. Just understand that you won’t own the crypto directly. What’s more, for these services, BlackRock charges an expense ratio of 0.25%.
Patience is key
Bitcoin’s scarcity and decentralization are amazing qualities that more of the world will become familiar with. At a current market cap of $2 trillion, the digital asset still has meaningful upside, in my opinion. It currently represents a tiny fraction of all the wealth in the world.
Consequently, I see the iShares Bitcoin Trust as being a promising place to park one’s capital. Given steady inflows, I believe a strategy known as dollar-cost averaging, coupled with adopting a very long-term mindset measured in decades, could help this ETF make you a millionaire.
The journey, though, is not going to be a smooth one. If history is any indication, there will be lots of volatility along the way. But for the disciplined and patient investor, there’s a good chance of a very favorable outcome down the road.
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Neil Patel and his clients have 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.
