Bitcoin Investing Strategies: What’s Best Between ETFs, Stocks, Spot

Back in December of 2024, I decided to hop aboard the bitcoin train and add some crypto exposure to my portfolio.

Markets were flush off of the recent Trump victory, there were whispers of a national bitcoin reserve, and bitcoin had recently broken the $100,000 threshold for the first time. The cryptocurrency had gone mainstream enough for late adopters like myself to deem it investable.

For my first foray into bitcoin, I purchased a share of Blackrock’s iShares Bitcoin Trust Trust (IBIT). I later added a share of Semler Scientific (SMLR), a healthcare technology company that holds bitcoin on its balance sheet. I wanted to try multiple methods of investing in bitcoin.

In hindsight, I realize I committed the classic retail investor impulse: buying in because of FOMO. Sure, positive investor sentiment led to gains in bitcoin, as well as the ETF I bought that was designed to track the crypto. But my stock purchase proved ill-timed.

Almost six months later, bitcoin has crossed new all-time-highs, and I have mixed feelings on my investment.

Bitcoin ETFs are a beginner-friendly way to get exposure

I opted to buy IBIT instead of actual spot bitcoin because it was a more accessible way to get exposure. I didn’t want the hassle of setting up a Coinbase account. Plus, buying a single share in an ETF was more psychologically appealing than buying a tiny fraction of a bitcoin (I did not have a spare $100,000 or the risk tolerance to buy an entire bitcoin).

The performance has been encouraging. Year-to-date, IBIT is up about 14%, outpacing a 12% gain for bitcoin itself. It’s done its job of tracking the crypto, and even added a little extra. And it’s far outperformed the S&P 500, which is up just 2% in 2025.

ETFs can experience slight tracking differences due to management fees, operational costs, and the timing of inflows and outflows. But if you want a rough proxy of bitcoin performance without actually owning the underlying asset, IBIT gets the job done.

A year and a half over its launch, IBIT has gained incredible popularity, growing to over $70 billion in assets under management. Robert Cannon, a financial advisor at Experity Wealth with a specialization in alternative assets, recommends his bitcoin-curious clients to start with the ETF.

“It’s the easiest, cleanest representation of bitcoin, compared to some of the other strategies that are a bit esoteric,” Cannon told me.

The ETF wrapper has really helped bitcoin adoption take off in the last year, Rahul Sen Sharma, president and co-CEO at the custom index provider Indxx, told me. Sharma’s seeing a surge in interest for bitcoin and digital asset ETFs, and he believes Trump’s continued support for crypto will pave the way for more mainstream adoption.

Be careful with bitcoin treasury companies

Getting bitcoin exposure through other methods was indeed more esoteric — and much less profitable.

I added Semler Scientific to my portfolio on January 8, 2025, and it’s down more than 40% since then.

There’s a growing trend among companies to add bitcoin to their balance sheets, with Strategy, Tesla, and GameStop being one of the most prominent examples. The president’s own Trump Media and Technology Group has recently raised $2.5 billion to buy bitcoin. Semler Scientific started adding bitcoin to its balance sheet in May of last year and now holds over 4,000 bitcoins.

It sounds like a good idea in theory: holding bitcoin as a reserve asset could be a hedge against inflation and dollar weakness, and could also lead to capital appreciation as bitcoin takes off.

Some companies like Strategy have had tremendous success. The firm has accumulated over half a million bitcoins, and the stock has outperformed the underlying crypto year-to-date. However, it’s hard to replicate the scale and expertise of Strategy. While many of Cannon’s clients often inquire about bitcoin treasury companies like Strategy, he usually recommends they stick to the basics with an ETF.

There were also company-specific headwinds for Semler Scientific. The company had been under investigation from the Department of Justice for allegedly misleading claims about one of its medical devices.

My takeaway from the experience is that buying a single stocks as a bitcoin proxy is probably not a good idea. When you buy into a bitcoin treasury company, you’re also inheriting all of its company-specific risks. That includes everything from management decisions and financial health to legal exposure, product performance, and market sentiment around the core business.

As a result, the benefits of diversification with bitcoin are watered down. If you’re looking for bitcoin exposure, either buying the real thing or a spot ETF is your best bet.

Maybe the strategy from here on out is to close out of my position in SMLR and do some tax-loss harvesting this year.