Is iShares Bitcoin Trust a Millionaire Maker?

Over the past decade, cryptocurrencies have created a significant number of millionaires. Bitcoin (CRYPTO: BTC) enthusiasts, such as MicroStrategy (NASDAQ: MSTR) executive chairman Michael Saylor, believe that the leading cryptocurrency could climb even higher in the future, potentially making many more millionaires.

However, purchasing Bitcoin isn’t always straightforward. You need to open an account with a cryptocurrency exchange, provide your banking details to fund that account, and familiarize yourself with the buying process. This was once the only way to directly include Bitcoin in your investment portfolio.

In January 2024, the investment landscape shifted when the Securities and Exchange Commission (SEC) approved the launch of 11 spot Bitcoin exchange-traded funds (ETFs). Now, you can buy or sell shares of these ETFs just like you would with any regular stock, and their prices are directly linked to the real-time value of Bitcoin.

This development has made investing in Bitcoin easier than ever. The iShares Bitcoin Trust ETF (NASDAQ: IBIT) has emerged as the largest and most popular spot Bitcoin ETF. But can you rely on this iShares trust to potentially make you a millionaire?

Is Bitcoin a sensible investment?

The iShares Bitcoin Trust is only a viable option if you believe Bitcoin will continue to grow in value. Some, like Michael Saylor, are confident it will, but not everyone shares this view. For instance, Warren Buffett, a legendary investor, is highly skeptical and has no plans to invest in this ETF.

In 2018, Buffett famously predicted that Bitcoin and the broader crypto market would end poorly. Even four years later, he stated that he wouldn’t buy “all the Bitcoin in the world” for $25 because it doesn’t generate any tangible value.

I wouldn’t argue against one of the greatest investing minds. He could be right, and I wouldn’t suggest putting your entire savings into Bitcoin. However, I see enough potential in this secure digital asset to justify a small investment. Cryptocurrencies make up less than 1% of my total portfolio, and Bitcoin isn’t even the largest portion of that.

I find myself somewhere between the extremes of Warren Buffett and Michael Saylor. I’m open to investing in Bitcoin, but only to a modest extent. This balanced approach seems more reasonable to me than either avoiding Bitcoin entirely or committing fully. As always, your perspective might differ.

What’s special about the iShares Bitcoin Trust ETF?

Let’s assume you’re interested in some type of Bitcoin investment, and the iShares ETF caught your eye. Is this particular fund the best way to go?

Many investors seem to agree, backing their belief with their investments. The fund has amassed $22.7 billion in assets under management, breaking records in the ETF industry by surpassing the $10 billion mark faster than any other ETF.

The second-largest spot Bitcoin ETF is the Grayscale Bitcoin Trust ETF (NYSEMKT: GBTC), with $14.4 billion in assets. However, this fund had a head start, reaching a peak asset value of $29 billion before the newer crypto ETFs entered the market. Following closely is the Fidelity Wise Origin Bitcoin ETF (NYSEMKT: FBTC), managing $11.4 billion in digital assets.

Can the iShares Bitcoin Trust ETF make you a millionaire?

Here’s a quick thought experiment. I’ll assume that Bitcoin’s price delivers a compound average growth rate (CAGR) of 15% in the long run. The real chart won’t be anywhere near this smooth growth hypothesis, but it’s good enough for some back-of-the-napkin calculations.

Put $1,000 into the fund and never touch it again. You’ll get there, but not quickly. In this case, a total investment of $1,000 would reach $1,000,000 shortly after the investment’s 46th anniversary.
How about a larger original investment? A $10,000 iShares ETF bet would grow past a million dollars in 31 years.
Alright, let’s try adding some funds along the way. Imagine starting with $10,000,then automatically adding $200 per month to your ETF investment. Here, you’ll reach that coveted millionaire status in 25 years, having invested a total of $70,000 by then.

Of course, the timelines will change if Bitcoin outperforms or underperforms the chosen CAGR. An average return of 20% per year would shorten the most aggressive approach to 20 years with $58,000 of invested funds. And if Warren Buffett is right, you’ll never see a million-dollar Bitcoin return.

So it can be done. The iShares Bitcoin Trust ETF — or any other investment in Bitcoin or anything else — might indeed make you a millionaire someday. But the process will require time, patience, and a pretty serious investment.

Should you invest $1,000 in iShares Bitcoin Trust right now?

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