Should you invest in Bitcoin ETFs?

Of course, the existence of a cheaper and easier way to trade Bitcoin doesn’t make the digital coin a buy, only cheaper and easier to do so. So crypto ETFs are a good way for traders to play Bitcoin or Ethereum if that’s already their intent, especially if it helps them avoid dubious crypto exchanges.

And SEC chief Gary Gensler nonetheless warned investors about cryptocurrency despite his agency’s approval of Bitcoin funds. “Investors should remain cautious about the myriad risks associated with bitcoin and products whose value is tied to crypto,” he said in 2024.

In its short lifetime, Bitcoin has been notoriously volatile, rocketing and plunging precipitously . That volatility has been great for adept traders since they make money on the volatility, and it hasn’t been too bad either for traders who have the stomach to hold on through the highs and lows. But many people tend to buy high and sell low, as the volatility melts their resolve.

Finally, it’s vital to know that Bitcoin is not backed by anything except the sentiment of traders. Unlike a stock, which is backed by the assets and cash flow of an underlying business, Bitcoin and most other cryptocurrencies rely solely on traders’ expectations to prop up their prices. It’s what investing experts call the “greater fool theory of investing,” since traders make money only by selling to someone else who is more optimistic about the cryptocurrency’s price potential .

For this reason legendary investor Warren Buffett has long avoided cryptocurrency , even going so far as to say that Bitcoin is “probably rat poison squared.”

Where can you buy the best Bitcoin ETFs?

Bitcoin ETFs are generally available at any broker that allows customers to purchase stocks on a major U.S. exchange. The best brokers for stock trading allow you to buy any available ETF with no commission, so you can get in and out of a position at a low cost.

Bottom line

The emergence of spot Bitcoin ETFs makes it easier and cheaper for traders to take a stake in the digital currency using just their traditional broker. These funds may well open up Bitcoin to wider acceptance as a store of value and push up the price of the cryptocurrency even more.

Editorial Disclaimer: All investors are advised to conduct their own independent research into investment strategies before making an investment decision. In addition, investors are advised that past investment product performance is no guarantee of future price appreciation.