What is the Best Bitcoin to Invest in? A Guide to Maximize Your Gains

Investing in Bitcoin can feel overwhelming. There are thousands of Bitcoin-related assets on the market today, and they all have different levels of risk and return that will impact your investment. If you want to simplify your Bitcoin investment strategy, you may wonder, “What is the best Bitcoin to invest in?” This guide will help you confidently answer that question to get up to speed on Bitcoin with the best Bitcoin annual returns and maximize your profits.

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What is the Best Bitcoin to Invest In?

bitcoin ready to be invested - What Is the Best Bitcoin to Invest In

Bitcoin is back and better than ever. The asset is priced well above $100,000, marking a gain of 160% over the past 12 months.

Bitcoin enthusiasts are crowing that 2025 is a breakout year for digital currencies, thanks primarily to President Donald Trump’s vociferous support. With the price of Bitcoin back on the rise, you may be wondering what’s driving the sudden resurgence of the world’s most valuable digital asset.

The Risks of Investing in Bitcoin

Despite the hype, Bitcoin markets remain lightly regulated and subject to extreme price volatility, leaving most Americans unwilling to hazard an investment. It’s one of the riskiest investment asset classes, warns Ariel Zetlin-Jones, professor of economics at Carnegie Mellon University’s Tepper School of Business. But even he admits it’s not a bad idea for investors to add some Bitcoin to their portfolio if the risks are understood.

Invest in a Bitcoin ETF

A Bitcoin exchange-traded fund (ETF) might be for you if you want to invest in Bitcoin but prefer not to own Bitcoin directly or manage the inherent risks, such as storage. Approved in 2024, Bitcoin ETFs make it easier to invest in Bitcoin and help you avoid the potentially riskier process of using a Bitcoin exchange. Because Bitcoin ETFs track Bitcoin, you should effectively see the same returns minus expense ratios as holding the coin directly but without the hassle of safely storing your Bitcoin.

The best Bitcoin ETFs are easy to buy and tend to offer low fees. You can even purchase fractional shares of a Bitcoin ETF. More advanced investors may consider trading options on Bitcoin ETFs or getting into Bitcoin futures ETFs. Investing in a BTC ETF is still risky, though. If the price of Bitcoin falls, so will the value of Bitcoin ETFs.

Invest Indirectly in Bitcoin

Bitcoin is a big business. If you want to step back from investing directly in Bitcoin, you could invest in a Bitcoin-related stock or ETF.

Some possibilities include:

Bitcoin mining: An ETF or stock in a company that mines Bitcoin could offer indirect exposure to Bitcoin.
Bitcoin buyer: MicroStrategy, a publicly traded company that owns hundreds of thousands of Bitcoins, offers something of a Bitcoin proxy investment. You can gain exposure to Bitcoin through MicroStrategy’s stock.
Bitcoin adjacent: Beyond individual stocks, some ETFs focus on companies that operate in the Bitcoin industry.
Blockchain ETFs: Blockchain is the digital ledger technology that supports Bitcoin. Blockchain ETFs allow you to invest in the backbone of Bitcoin without holding the coin itself.

4 Tips for Responsible Bitcoin Investing

bitcoin in bull run - What Is the Best Bitcoin to Invest In

1. Research: The Cornerstone of Bitcoin Investing

Bitcoin investing isn’t like buying stocks or bonds. The Bitcoin market is young and dynamic, and investing strategies can change overnight. Starting with in-depth research is critical to making informed decisions. Investors should always stick to the facts when getting started. This means learning about specific coins, exchanges, and wallets as much as possible.

While Bitcoin may be one of the most widely discussed topics on platforms like Reddit, it’s best to discount the advice offered by strangers on social media. They do not have your best interests at heart. The same goes for research materials provided by exchanges and platforms.

Anna Zetlin-Jones on the Risks of Investing in Meme Coins

Bitcoin expert Anna Zetlin-Jones warns that most meme coins are similar to non-fungible tokens NFTs, which were popular several years ago. While they may catch your attention, they are not a good financial move for most people.

“We have a lot of evidence now that a majority of people who invested in and bought NFTs ended up losing money,” says Zetlin-Jones. “That’s not to say no one made money, and that’s not to say there aren’t still some valuable non-fungible tokens today, but it is to say a majority of people who invested lost money. I think meme coins are quite similar.”

2. Volatility: The Name of the Game

Markets are volatile by nature, but it’s critical to recognize that Bitcoin prices are incredibly volatile. It can be easy to look at Bitcoin and see that it has quintupled in value over the last two years. Not many people will complain about returns like that. However, if you look more closely, there are some red flags. For example, between July 29 and August 5, 2024, the price of Bitcoin dropped by 22%.

“If you look at daily returns over short periods of time, its volatility of its returns is an order of magnitude larger than other what economists or financial market players view as risky assets, like the S&P 500 on a daily basis,” warns Zetlin-Jones.

When buying any coins, be wary that the price could dramatically rise and fall at any time of the day. For some, that may sound fun, but that could mean financial debilitation for others.

3. Don’t Put All Your Eggs in One Token: Diversifying Your Investment Portfolio

Millions of assets are available today, and owning a well-diversified portfolio can help mitigate the dramatic volatility and make investments less risky over the long term.

Investors should only make BTC a minor part of their broader investment portfolio after index funds, ETFs, fixed-income assets, and individual stocks. Traditional financial assets are far less risky.

“I think there’s growing consensus that a portion of your portfolio being invested in (Bitcoin) is not offering a bad idea,” says Zetlin-Jones. “But people should understand the risks they take when they expose part of their portfolio to these very risky assets.”

4. Weigh the Risks Versus the Rewards: The Pros and Cons of Bitcoin Investing

Bitcoin has its perks. The market never closes and can remove barriers like dealing with financial market intermediaries, international borders, and fees.

“As opposed to investing in an ownership of company shares through traditional stocks, investing in BTC provides investors the opportunity to trade 24/7, support blockchain projects they are interested in, collect and trade digital assets and memorabilia like NFTs, and much more,” Shapiro adds that the Bitcoin market is a far more efficient way for markets to operate.

However, that comes with downsides. Besides volatility and potential scams, governments and financial institutions provide far fewer consumer protections for Bitcoin users. If you feel wronged in the Bitcoin market, there may be little that anyone can do. Don’t forget that any American who sells BTC, receives it as payment, or has other digital transactions must report it as part of your annual tax filing.

The Takeaway: Stay Skeptical When Engaging With BTC

Pew Research shows fewer than 1 in 5 Americans have experimented with Bitcoin investment. President Trump has promised to bring the industry into the mainstream, and his administration is expected to create an advisory council. Trump’s pick to lead the U.S. Securities and Exchange Commission (SEC) is a vocal Bitcoin advocate.

“We welcome the supportive stance of the new administration to advance innovation in digital assets. We expect to see clearer regulations and policies designed to accelerate the responsible adoption of Bitcoin, which will fuel further growth in the global market and the industry as a whole,”

Depending on who you speak to in the financial industry, they may have radically different viewpoints. While some investors will not touch it with a 10-foot pole, others use it daily to store, transfer, and invest money. Shapiro, for example, says he has used Bitcoin to pay rent.

Zetlin-Jones says it remains to see how Bitcoin will compete with the traditional banking network. “It’s still one of the most volatile asset classes in financial markets … but it’s a technology in search of a killer app,” he adds.

If you join the millions of people who have dived into Bitcoin, you must recognize that it differs from traditional financial markets. The risk of losing money in a short period is high. And while new technology is never perfect, cautious and informed investors have the potential to benefit.

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What is the Best Bitcoin to Invest in? A Guide to Maximize Your Gains

28 de enero de 2025