The iShares Bitcoin Trust (IBIT), Ark 21Shares Bitcoin ETF (ARKB), and Fidelity Wise Origin Bitcoin ETF (FBTC) have done well this year, with their combined assets jumping to almost $40 billion. Other spot Bitcoin ETFs have also attracted inflows, mainly from institutional investors.
Bitcoin ETFs have had strong inflows
I have made the case for Bitcoin ETFs in the past, arguing that they will likely continue doing well in the long term. Besides, BTC has a long track record of outperforming traditional assets like stocks, cryptocurrencies, and art.
Bitcoin ETFs will also benefit from the industry’s ongoing supply slowdown because of the halving event. Data shows that the supply of Bitcoin in exchanges has crashed hard in the past few months. There is also better regulatory clarity, and the Fed has hinted that it will start cutting rates this year.
Also, Bitcoin has proven to be a good store of value in the past 15 years despite the criticism of most mainstream investors like Warren Buffett and Jamie Dimon.
MicroStrategy is a good Bitcoin ETF alternative
While these ETFs are suitable, MicroStrategy is a good alternative to invest in for three main reasons.
First, spot Bitcoin ETFs track the price of BTC, meaning that holders of the two assets generate almost similar returns. In this case, investing in Bitcoin instead of ETFs is even better because it has no holding fees.
Most Bitcoin ETFs come with an expense ratio of 0.25%. This means that if you invest $100,000 in the IBIT or FBTC, you’ll be paying at least $250 annually. Over a decade, that’s a total of $2,500. In contrast, Bitcoin investors can avoid this fee. Similarly, investing in MicroStrategy is also fee-free, offering potential cost savings for investors.
Second, MicroStrategy is closely correlated with Bitcoin but tends to perform better. For example, Bitcoin has jumped by 166% in the past 12 months, while MicroStrategy shares have jumped by 422%. The same is happening this year: MSTR is up by 134%, while Bitcoin has risen by 50%.
Bitcoin stock vs MicroStrategy
Therefore, if you believe that Bitcoin has more upside, I believe that it makes sense to invest in MicroStrategy, which holds thousands of coins.
Third, MicroStrategy has said that it will not sell its coins any time soon. Instead, on Thursday, the company said that it will borrow $500 million to increase its Bitcoin holdings. As such, some analysts believe that MSTR is a better Bitcoin ETF without the fees.
There are risks to investing in MSTR though. The company can decide to sell its Bitcoin holdings at any time without disclosing to investors. There is also a risk that it will have a liquidity issue if it decides to liquidate.
