Should You Buy the iShares Bitcoin Trust ETF While It’s Under $40?

The crypto market is poised for serious price gains over the next two years. In particular, many investors are looking forward to a significant price jump for Bitcoin (BTC -0.21%).

But the oldest and largest cryptocurrency is already worth around $65,000 per coin. You can buy a very small fraction of a full Bitcoin, but the digital currency itself seems overwhelmingly expensive.

Well, what if I told you that there are other ways to invest in Bitcoin where the price per unit is $37 more manageable today?

talk about iShares Bitcoin Trust ETF (IBIT 1.49%). This is the most popular exchange traded fund (ETF) that manages a basket of actual Bitcoin holdings. Its price moves up and down in step with Bitcoin itself, making the ETF a fairly straightforward way to invest in cryptocurrencies. And it should be much easier to understand your modest ETF share prices.

Benefits of Bitcoin ETFs

The ETF structure comes with many benefits, but the low price is often overlooked.

• You can buy, sell and hold ETFs in almost every stock brokerage account alongside your other stocks and funds.
• The traditional ETF structure comes with financial regulations, formal reporting requirements and investor protection insurance. Your brokerage generates tax reporting forms for these assets. Many of these features are not available from a crypto brokerage.
• The first two points allow entire classes of investors to trade Bitcoin where they couldn’t before. For example, this applies to institutional investors and retirement accounts.
• If you’re worried about security breaches and hacker attacks, ETFs add several layers of extra security. The iShares fund is managed by a financial services giant Blackrock (BLK 0.02%)and actual Bitcoin transactions are executed by Coinbase (CURRENCY 6.28%) First class service. And you’ll never have to worry about forgetting a crucial password or losing a hardware security key to your Bitcoin account. The individual investor is doubly removed from data security risks, protected by the operational expertise and insurance of Blackrock and Coinbase.

And then there’s the low entry price. You can buy a hundred million of a Bitcoin, worth a small fraction of a cent today, but it makes more sense to deal with whole units of investments at reasonable prices. The iShares fund is in that Goldilocks range, below $100 per share and well above the dreaded penny-stock zone.

If Bitcoin prices skyrocket on a good day, iShares could split its ETF shares just like companies split their shares. So the price will likely remain at a comfortable level as long as the fund exists. In a world where the price of Bitcoin rises to $1,000,000 per coin, as some bullish investors expect, the iShares ETF would naturally rise to around $570 per share. A quick 10 for 1 split would bring it back into the sub $100 arena.

What would a $40 iShares Bitcoin Trust ETF mean

In other words, spot Bitcoin ETFs like the iShares option will likely always provide a lower-cost method of investing in Bitcoin. The actual price of the underlying digital currency makes no difference – investors only care about the direction and distance of its long-term price trend.

In today’s market, a price target of $40 for the iShares Bitcoin Trust ETF results in a Bitcoin price close to $70,100 per coin. However, this is about 7% above the current prices of the fund and the cryptocurrency.

I can’t promise that those prices will rise in 2025. Cryptocurrencies are too volatile and unpredictable for such discussions. But the cryptocurrency recently executed its fourth halving of mining rewards, and the first three sent Bitcoin prices soaring over the next two years. And for the commonly discussed reasons listed earlier, the availability of spot Bitcoin ETFs could add more fuel to the market fires of this halving cycle.

So I wouldn’t be surprised to see the iShares Bitcoin Trust ETF rise to $60 or even $80 per share in 2025. That’s the equivalent of Bitcoin price targets in the $100,000 to $130,000 range — served up in lighter sizes to manage.

These days, Bitcoin is a reasonable addition to any long-term investment portfolio, and the iShares fund makes it easy to take your first step into the crypto sector.