The exciting and volatile world of cryptocurrency investing has piqued the interest of many DIY investors and traders, as the ability to speculate on wild price swings and surges holds the potential to mint millionaires.
Others see certain cryptocurrencies for their utilitarian value and application as a store of value, making them buy-and-hold investments that have the potential to increase significantly in value over time and offer diversification benefits.
The king of cryptocurrencies
Among cryptocurrencies, bitcoin is the original cryptocurrency and remains the largest and most popular by market cap.
First mined in January 2009, the first bitcoin price was recorded on March 17, 2010, at a value of $0.003. Over the next 15 years, the price surged to reach an all-time high on August 20, 2025, at over $112,778.34 – that is a compound annual growth rate (CAGR) of 209.74%!
Unsurprisingly, the idea of adding bitcoin exposure to a portfolio has become appealing to more retail investors over the years as a potential growth driver.
Furthermore, as bitcoin has historically had a low correlation with traditional assets like stocks and bonds, it is also seen as a potential portfolio diversifier. Even a small allocation can potentially improve risk-adjusted returns.
Simplifying complexity
However, the traditional way of investing entails buying bitcoin directly and holding it in a digital wallet. This approach comes with its own set of challenges, such as custody risks and security concerns.
A simpler, safer and easier way for DIY investors and traders to gain bitcoin exposure without owning the cryptocurrency is through exchange-traded products (ETPs). These products offer a more accessible and familiar way to gain indirect bitcoin exposure without needing to wade into the technical details of crypto custody.
Benefits of Investing Through Bitcoin ETPs
- Simplicity and accessibility: You don’t need to set up a crypto wallet, manage private keys, or navigate crypto exchanges. Buying shares of a bitcoin ETF is as easy as buying or trading stocks in the most valuable listed companies.
- Reduced custody and security risks: A major concern with direct bitcoin ownership is the possibility of losing access to funds due to misplaced keys or exchange hacks. With an ETF, institutional-grade custodians handle storage and security.
- Regulated structure: ETFs are regulated investment vehicles, meaning investors benefit from transparency, reporting standards, and oversight that are often missing in the broader crypto market.
An established fund
An ETP like the iShares Bitcoin Trust ETF (IBIT-NASQ) is designed to track the bitcoin price. Instead of buying, storing, and safeguarding the cryptocurrency yourself, you buy shares of the ETF through the Clarity platform, just as you would with any stock or index fund.
The fund itself handles the actual bitcoin ownership and custody on your behalf, helping remove the operational, tax, and custody complexities of holding bitcoin directly.
Shares Bitcoin Trust ETF has been the most traded bitcoin ETP since launch, providing investors with potentially lower transaction costs1. The fund is also managed by the world’s largest asset manager, BlackRock, and leverages a multi-year technology integration developed with Coinbase Prime, the world’s largest institutional digital asset custodian.
Bitcoin on-ramp
For retail investors intrigued by bitcoin but hesitant to dive into the complexities of crypto wallets and private keys, ETPs like the iShares Bitcoin Trust ETF provide a practical on-ramp.
As with any investment, it’s important to weigh the pros and cons, consider your risk tolerance, and determine what role bitcoin exposure should play in your broader financial strategy.
If bitcoin exposure fits into your investment strategy based on its diversification and potential growth benefits, indirect bitcoin exposure through an ETF could strike the right balance between innovation and simplicity.
References:
- Based on 20-day average trading volumes and 20-day average bid-ask spreads across all ten U.S. spot bitcoin ETPs, since the commencement of trading on January 11, 2024, through July 24, 2024. Liquidity, characterized by strong trading volume and narrow bid-ask spreads, may potentially lower costs for investors by helping to improve price discovery, reduce transaction costs, and increase market stability. Source: Bloomberg, as of July 24, 2024.
