Is Bitcoin an Investment? New EFTs Do Not Make It Less Risky

rick kahlerAdvisor Perspectives welcomes guest contributions. The views presented here do not necessarily represent those of Advisor Perspectives.

If you're looking for a heart-pounding rollercoaster ride into the uncharted territory of financial wild things, forget boring old S&P 500 returns. Look no further than the shiny new bitcoin ETFs hitting the market.

Or not.

You may have seen ads for the newest, easiest way to invest in the cryptocurrency bitcoin through exchange traded funds. Some of the EFTs are offered by Wall Street giants like Franklin Templeton, Fidelity, and BlackRock. The funds hold the digital tokens themselves, meaning any money you put into the fund will buy bitcoin directly. Your returns will follow every dizzying peak and stomach-churning dip of the crypto rollercoaster.

A bitcoin fund managed by a reputable brokerage firm may provide an air of respectability. It may make it easy for ordinary investors to own cryptocurrency without necessarily having any idea what “blockchain” means or what a “digital wallet” is. That does not make Bitcoin an investment instead of a speculation.