Could Investing $1,000 Into This Bitcoin ETF Make You a Millionaire?

Bitcoin (CRYPTO: BTC) recently hit the $100,000 mark again. The bullishness is back as investors continue to pile money into the top cryptocurrency. And if some crypto enthusiasts are right, this may be just the start of more gains to come.

The good news is that if you don't want to worry about digital wallets and just want an easy way to invest in Bitcoin, there are spot exchange-traded funds (ETFs) you can put into your portfolio today to gain exposure to the digital currency, such as the iShares Bitcoin Trust ETF (NASDAQ: IBIT). Could investing $1,000 in this ETF help make you a millionaire?

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Image source: Getty Images.

The ETF has been soaring

Investing in the iShares Bitcoin Trust ETF can be an effective way to track Bitcoin. The fund charges an expense ratio of 0.25%, which is comparable to what many other ETFs charge. Most importantly, however, is that your performance from holding the fund in your portfolio would be comparable to actually holding Bitcoin.

Bitcoin price data by YCharts.

While there is some minor disparity, the ETF does a good job of tracking the digital currency, and you would be up over 60% right now if you invested in the fund a year ago.

How much would Bitcoin need to rise in value for you to become a millionaire?

For a $1,000 investment in anything to grow to a value of $1 million, you would need it to grow to 1,000 times its original value. That's not a small performance by any stretch. But given the enthusiasm around Bitcoin, could it be possible?

It recently surpassed $100,000. Assuming you invested in the iShares Bitcoin Trust ETF right around now, then you would need the digital currency to climb to a value of at least $100 million at some point in the future. That would be around the level necessary to turn a $1,000 investment into $1 million.

One of the biggest Bitcoin bulls is Michael Saylor, the former CEO of Strategy (formerly known as MicroStrategy). He believes that the cryptocurrency could reach a value of $13 million by 2045. And under his bull case, he projects it could be worth $49 million.

Those would be phenomenal returns for the cryptocurrency. However, even if it did reach those levels, that still wouldn't be enough for a $1,000 investment in an ETF tracking the digital currency to make you a millionaire. While over the very long term (i.e., 30-plus years) that may be more likely, it would indeed be an extremely bullish, best-case scenario for that to happen.

Investors shouldn't overlook the risk that comes with investing in crypto

Bitcoin has been picking up steam in recent weeks after a tough start to the year, as crypto investors remain bullish once again on the popular coin. But it's important to consider the volatility and risk that can come with it, as this is still a highly speculative investment to be holding in your portfolio. Within just the past 12 months, it has hit highs of more than $106,000 but lows of less than $54,000 as well.

Those kinds of wild swings can be exciting when things are going up, but they can also be depressing on the way down. Investing in the crypto can yield great returns for investors, but it's important to temper your expectations. And while the iShares Bitcoin Trust ETF may make it easier to do so, that doesn't mean it's any less risky.

If you want to invest in Bitcoin, I would suggest taking only a small position (less than 5% of your portfolio) to ensure you aren't taking on too much risk.

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David Jagielski has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bitcoin. The Motley Fool has a disclosure policy.