Do you experience FOMO or are you afraid to miss it? I do, and I and you do. It’s a dangerous motive that you can do things you don’t normally think you’d do, and Wall Street is a dangerous place when it comes to FOMO.
One of the major investment trends today is cryptocurrency. So I was looking at iShares Bitcoin Trust. (NASDAQ: IBIT). But is this exchange trade fund an easy way to make crypto wealth, or is it too risky to worry about it? I put away the FOMO and tried to find my answer.
iShares Bitcoin Trust’s investment goal is to “reflect the performance of Bitcoin prices in general.” Its biggest holding is as you would imagine, considering Bitcoin, the name of the Exchange-Traded Fund (ETF). There’s a little cash in the ledger too, but that’s not important. iShares Bitcoin Trust is an easy way for people to invest in Bitcoin without experiencing the headache of owning cryptocurrency directly.
If you were thinking of jumping into the code, this is a pretty compelling way to do it. However, at ETFs of 0.25%, the expense ratio is a little higher. However, given the specialization of the product, the cost is probably not unreasonable. And investors are well rewarded as the Ishares Bitcoin Trust has risen by about 85% since its inception in early 2024. But that’s where problems arise for investors like me.
The chart above looks pretty reasonable. There are ups and downs, but the trend is generally high and is on the right. However, if you switch the charts to see the drawdown, you will see that there is a rather large performance swing here. The chart below highlights that fact quite clearly.
However, swinging is not the biggest problem with this graph. That’s a period. The graph covers iShares Bitcoin Trust since it was created on January 5th, 2024. All of that volatility occurred in just 15 months. It’s a shocking amount of volatility, but it’s pretty normal in the crypto market.
That’s why I don’t have what I need to buy an iShares Bitcoin Trust. I am a conservative and income-oriented investor. I like boring and reliable stocks, and I can reward myself for sticking to regular and hopefully growing dividend checks. Nothing is provided by iShares Bitcoin Trust.
I feel the pain of missing out on a huge profit, but I realize that if I own an iShares Bitcoin Trust, I can’t sleep at night. Buying it would violate almost every investment principle I cherish. I’m sure there are many people who have made a lot of money from this type of investment. Good for them; I wish them well, and I hope they will not wipe out all their profits. However, Ishares Bitcoin Trust does not have a place in my portfolio. It’s simply too unstable and doesn’t fit my income goals.
The story continues