Better Crypto ETF or Direct Buy: IBIT vs. XRP

Now that crypto investors can buy exchange-traded funds (ETFs) holding everything from Bitcoin (CRYPTO: BTC) to XRP (CRYPTO: XRP), the big question is which fund or coin deserves the largest allocation. For instance, the iShares Bitcoin Trust (NASDAQ: IBIT) gives investors exposure to Bitcoin, whereas the Bitwise XRP ETF (NYSEMKT: XRP) does the same for XRP.

Both funds remove the hassle of self-custody, but the ETF structure doesn't actually determine whether the underlying asset deserves your capital. So let's look at the case for buying each.

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Bitcoin should probably be your core crypto position

The iShares Bitcoin Trust holds 810,000 bitcoins, valued at about $65 billion, and it has a fairly low annual expense ratio of 0.25%. Since spot Bitcoin ETFs launched in early 2024, the cumulative net capital inflows across the category have topped $58 billion, with the iShares ETF absorbing the lion's share. April 2026 alone saw nearly $2 billion in net inflows, the largest monthly amount so far this year.

Importantly, those flows likely reflect a growing institutional perception that, much like gold, Bitcoin increasingly functions as a store of value, and also as a neutral bearer asset. Both of those traits are reasons to consider owning it. Its supply is permanently capped at 21 million coin, 95% of which have already been mined, and each halving event cuts the rate of new issuance in half.

What's more, new groups of buyers and holders are emerging and contributing to demand for the coin, including corporate treasuries, digital asset treasury companies (DATs) like Strategy, central banks, and, with the rise of the ETFs, asset managers and even retirement investors. So, given the constricting supply situation, there will likely be enough consistent demand for Bitcoin to keep its price rising over the long term.

XRP ETF asks investors to bet on a company as well as a coin

The Bitwise XRP ETF launched in November 2025, charges 0.34% annually, and has gathered roughly $354 million in assets. So, while it and other XRP ETFs are broadly successful in attracting new capital, they're tiny relative to the Bitcoin ETFs.

The investment thesis for buying XRP is also fundamentally different than the one for buying Bitcoin or one of its ETFs. XRP's value hinges on the ability of its issuer, Ripple, to gain a position in a variety of different financial infrastructure segments, leading to higher demand for XRP.

Some of those segments, like tokenized assets, are projected to increase enormously during the coming years, and XRP's network already has a foot in the door; the McKinsey consulting firm estimates that the market for tradeable tokenized assets could expand to $2 trillion by 2030, up from $31.7 billion today. Right now, XRP holds just $428.1 million in tradeable tokenized assets, making it the 11th-largest network by tokenized asset value.

But winning in various market segments means that Ripple has to keep closing deals with financial institutions and fending off rivals in tokenization and also in other segments like stablecoins. More importantly, holders of XRP, regardless of how they hold it, need to see the price of the coin appreciate as a result of Ripple doing those things.

And given that the fees on the blockchain are so minuscule, not to mention that XRP's price is only up by just 11% during the past five years even as of Ripple added new capabilities to the network and onboarded fresh capital, it's an open question whether holders can expect a return even if its issuer knocks its business plan out of the park.

Proportion your crypto holdings conservatively

Bitcoin should be the biggest slice of any serious crypto portfolio, whether you choose to hold it via a custodian or to hold it directly. Its scarcity is mechanically increasing over time, it doesn't need to consistently win major competitive battles to stay relevant, and it already has the deepest institutional support of any digital asset.

XRP can serve as a smaller holding if you believe in Ripple's roadmap and if you're tolerant of both volatility and execution risk. Despite the weak link between utilization and price, XRP could still outperform again, just as it did in the past. Just don't allocate your capital to it before you've fully diversified your portfolio and loaded up on Bitcoin first.

Alex Carchidi has positions in Bitcoin and iShares Bitcoin Trust. The Motley Fool has positions in and recommends Bitcoin, XRP, and iShares Bitcoin Trust. The Motley Fool has a disclosure policy.