Billionaires Are Buying a BlackRock ETF — It Could Soar Up to 8,990%, According to Wall Street Experts
Investors should never anchor to price targets, especially when those price targets promise extraordinary gains. Nevertheless, I think patient investors comfortable with volatility should have exposure to Bitcoin, ideally through a spot Bitcoin ETF like the iShares Bitcoin Trust. Here’s why.
Asset prices are driven by supply and demand, but Bitcoin is somewhat atypical in that its supply is limited to 21 million coins, which means demand is the most consequential variable. And there are two big reasons to believe demand for Bitcoin will increase in the future.
Institutional investors, a group that controls about $130 trillion in assets, have long avoided cryptocurrency due to regulatory uncertainty. But that is changing due to the approval of spot Bitcoin ETFs last year and the pro-cryptocurrency stance of the Trump administration.
I’ve already mentioned three hedge fund managers who recently added to their stakes in the iShares Bitcoin Trust, but the number of large asset managers (i.e., those with $100+ million in securities) that own positions in the fund rose 150% during the last year, and the number of shares owned by those asset managers increased 200%.
Strategy (formerly MicroStrategy) has become a Bitcoin investment vehicle. The company owns 636,505 Bitcoin, 3% of the total supply, and it has added to its position at least once per quarter for five straight years. During that period, Strategy has seen its market capitalization increase 6,500%.
Inspired by that success, several other companies now use Bitcoin as a corporate treasury asset, including Block, Mara, Semler Scientific, Tesla, and Trump Media & Technology Group. In total, the number of Bitcoin owned by public and private companies rose 95% over the past year, according to BitcoinTreasuries.net.
Owning Bitcoin is often more complicated and expensive than owning a spot Bitcoin ETF. For instance, investors that want to own Bitcoin must first create and fund an account with a cryptocurrency exchange. Admittedly, some brokerages offer crypto trading — Robinhood is one example — but most brokerages do not, which means managing multiple portfolios.
Also, Coinbase, the largest U.S. cryptocurrency exchange, charges between 0.4% and 0.6% per transaction under $10,000. That means investors pay relatively high fees two times, once when they buy and again when they sell. But the iShares Bitcoin Trust has an annual expense ratio of 0.25%, meaning shareholders will pay just $25 per year on every $10,000 invested in the fund.
As a caveat, investors should bear in mind cryptocurrencies tend to be volatile, and Bitcoin is no exception. Its price has declined more than 50% from a record high twice in the last five years, and it lost more than 75% of its value during one of those drawdowns. Similar volatility is possible (if not probable) in the future.
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Trevor Jennewine has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bitcoin, Block, and Semler Scientific. The Motley Fool recommends Coinbase Global and Standard Chartered Plc. The Motley Fool has a disclosure policy.
Billionaires Are Buying a BlackRock ETF — It Could Soar Up to 8,990%, According to Wall Street Experts was originally published by The Motley Fool