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But MicroStrategy CEO Michael Saylor remains bullish. In fact, he not only sees a revival for the cryptocurrency but expects plenty of upside above its previous high.
“I think that the next logical stop for bitcoin is to replace gold as a non-sovereign store of value asset and gold is a $10 trillion asset right now. Bitcoin is digital gold, it's 100x better than gold,” he says at MarketWatch’s Money Festival on Wednesday.
“You can't inflate it. The half-life of money in bitcoin is forever. You can move it on billions of computers at the speed of light. So if bitcoin goes to the value of gold it’s going to $500,000 a coin, and I think that happens this decade.”
Considering where bitcoin is trading right now, $500,000 implies a potential upside of over 2,500%.
Saylor is putting his money where his mouth is. He tells MarketWatch that he personally owns 17,732 bitcoins that he’s had for “about two years” and bought “around the $9,500 range.”
His company MicroStrategy has bought about 130,000 bitcoins for a total price of approximately $3.98 billion.
Still, the path probably won’t be a straight line.
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“I think this is the decade where bitcoin institutionalizes from 2020 to 2030,” he says, adding that “it'll be a wild ride.”
If you share Saylor’s view, here are a few ways to gain exposure to this cryptocurrency.
More: Compare the best investment apps
Buy bitcoin directly
The first option is the most straightforward: If you want to buy bitcoin, just buy bitcoin.
These days, many platforms allow individual investors to buy and sell crypto. Just be aware that some exchanges charge up to 4% commission fees for each transaction. So look for apps that charge low or even no commissions.
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While bitcoin commands a five-figure price tag today, there’s no need to buy a whole coin. Most exchanges allow you to start with as much money as you are willing to spend.
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Bitcoin ETFs
Exchange-traded funds have risen in popularity in recent years. They trade on stock exchanges, so buying and selling them is very convenient. And now, investors can use them to get a piece of the bitcoin action, too.
For instance, ProShares Bitcoin Strategy ETF (BITO) started trading on NYSE Arca in October 2021, marking the first U.S. bitcoin-linked ETF on the market. The fund holds bitcoin futures contracts that trade on the Chicago Mercantile Exchange and has an expense ratio of 0.95%.
Investors can also consider the Valkyrie Bitcoin Strategy ETF (BTF), which made its debut a few days after BITO. This Nasdaq-listed ETF invests in bitcoin futures contracts and charges an expense ratio of 0.95%.
Bitcoin stocks
When companies tie some of their growth to the crypto market, their shares can often move in tandem with the coins.
First, we have bitcoin miners. The computing power doesn’t come cheap and energy costs can be substantial. But if the price of bitcoin goes up, miners such as Riot Blockchain (RIOT) and Hut 8 Mining (HUT) will likely receive growing attention from investors.
Then there are intermediaries like Coinbase Global (COIN) and PayPal (PYPL). When more people buy, sell, and use crypto, these platforms stand to benefit.
Finally, there are companies that simply hold a lot of crypto on their balance sheets.
Saylor’s company serves as a prime example. MicroStrategy is an enterprise software technologist with a market cap of $2.2 billion. Yet its stash of around 130,000 bitcoins is worth approximately $2.47 billion.
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Jing is an investment reporter for Moneywise. He is an avid advocate of investing for passive income. Despite the ups and downs he’s been through with the markets, Jing believes that you can generate a steadily increasing income stream by investing in high quality companies.
