The Smartest Way to Invest in Cryptocurrency With $100 Right Now

Key Points

• Crypto investors can either invest in Bitcoin directly, or indirectly via spot Bitcoin ETFs.

• Spot Bitcoin ETFs provide 1:1 tracking with the price of Bitcoin, and come with ultra-low fees.

• The ETFs make it easy for investors to adjust their portfolio allocations to crypto.

• 10 stocks we like better than iShares Bitcoin Trust ›

If you only have $100 to invest in the crypto market right now, you might get a case of "sticker shock" after you check out current crypto prices. For example, Bitcoin (CRYPTO: BTC) is now trading for $111,000, and Ethereum (CRYPTO: ETH) is trading for $4,500.

So what's the best way to put that $100 to work? Instead of squandering your funds on a bunch of speculative meme coins trading for mere pennies, there's a smarter way to invest. Here's how to do it without breaking the bank.

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Choosing the right crypto

There are literally tens of thousands of different cryptocurrencies, but just one -- Bitcoin -- accounts for nearly 60% of the value of the entire crypto market. It's safe to say that your decision of which crypto to buy should start here.

Bitcoin remains the benchmark cryptocurrency that all others follow, and is usually the first cryptocurrency that both retail and institutional investors buy.

Image source: Getty Images.

The reason for Bitcoin's popularity is easy to understand, given that it has an unparalleled track record of success. For much of the past decade, Bitcoin has been the top-performing asset in the world. As a result, the price of Bitcoin has soared from $10,000 in 2017 to over $111,000 today.

ETFs for Bitcoin

You could, of course, choose to buy $100 worth of Bitcoin on a major cryptocurrency exchange. You'd then see that you own 0.0009 BTC every time you open up your account.

But there's a smarter way to buy Bitcoin, and that's by buying shares in any of the new spot crypto exchange-traded funds (ETFs) that are available for Bitcoin. These exchange-traded funds offer an easy, convenient, and low-cost way to invest in Bitcoin.

In fact, for less than $100, you can still buy a full share of just about any spot Bitcoin ETF you'd like. For example, the most popular spot Bitcoin ETF is the iShares Bitcoin Trust (NASDAQ: IBIT), which trades for a price of $63. But you could just as easily buy the Fidelity Wise Origin Bitcoin Fund (NYSEMKT: FBTC), which trades for $97 per share, or the Ark 21 Shares Bitcoin ETF (NYSEMKT: ARKB), which trades for just $37.

It's really up to you. The differences in prices simply reflect the amount of Bitcoin that each ETF owns and the number of shares each ETF has issued. There's no real difference between using your $100 to buy three shares of the Ark 21 Shares Bitcoin ETF or one share of the Fidelity Wise Origin Bitcoin Fund. You're still getting $100 worth of exposure to Bitcoin.

All of these spot Bitcoin ETFs have approximately the same expense ratios, too, so there's no real cost savings in choosing one ETF over another. So, for example, the iShares Bitcoin Trust has an expense ratio of 0.25%, and the Fidelity Wise Origin Bitcoin Fund also has an expense ratio of 0.25%. The Ark 21 Shares Bitcoin ETF comes in at just 0.21%.

Spot ETFs offer 1:1 tracking of Bitcoin

Given that Bitcoin has been the best-performing asset in the world for much of the past decade, it's important that any spot crypto ETF can track the price of Bitcoin on a 1:1 basis. If Bitcoin goes up more than 100% in a year (which it did in both 2024 and 2023), that means the value of your ETF will also go up more than 100% in a year.

Bitcoin / U.S. dollar chart by TradingView

As you can see from the chart from TradingView, the top spot Bitcoin ETFs actually do a fantastic job of tracking the price of Bitcoin. That's what makes them so valuable: You get 1:1 tracking of Bitcoin, in the form of an investment product that's easy to buy and sell. At the same time, you don't have to worry about dipping your toes into the deep end of the crypto pool to buy Bitcoin.

Getting the Bitcoin allocation right

There's another built-in advantage to using ETFs for managing your Bitcoin exposure: they make it easy to tailor your portfolio allocations to your preferences.

Let's say, for example, that the total value of your portfolio is $10,000. If you choose to put your $100 to work in Bitcoin ETFs, that means your portfolio allocation to crypto would be approximately 1%.

If that allocation is too low for your liking, you might decide to increase how much you plan to spend on Bitcoin going forward. And if it's too high, you can easily scale back your initial purchase.

Buy and hold Bitcoin for the long haul

Overall, Bitcoin remains the single best cryptocurrency to buy and hold for the long haul. Analysts are now projecting that the price of Bitcoin could hit $1 million within the next five years, so it's not too late to get started with Bitcoin investing.

If you have $100 to spend, it's definitely worth getting exposure to Bitcoin now, before it soars in price. Five years from now, it might turn out to be one of the best investments you ever make.

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Dominic Basulto has positions in Bitcoin and Ethereum. The Motley Fool has positions in and recommends Bitcoin and Ethereum. The Motley Fool has a disclosure policy.