Better 52-Week-Low Buy: Bitcoin or the iShares Bitcoin Trust ETF?

Bitcoin (CRYPTO: BTC) and the iShares Bitcoin Trust ETF (NASDAQ: IBIT) are both around 52-week lows. Bitcoin is in the midst of a 40% drawdown from its all-time high set in early October 2025.

Here's why Bitcoin is falling and if you should buy the dip directly through Bitcoin or an exchange-traded fund (ETF).

Image source: Getty Images.

Why Bitcoin is selling off

Like gold and silver, Bitcoin's price is heavily influenced by supply and demand. And more specifically, by liquidity, regulation, monetary policy, institutional adoption, and retail investor demand.

Over the last year or so, Bitcoin has been under pressure due to a flurry of economic events, geopolitical issues, tariffs, and more. Over the last four months, there have been several instances when Bitcoin has fallen by more than 5% in 24 hours or more than 10% in 10 days.

If many buyers rush to buy Bitcoin at once, it can rapidly drive prices higher due to limited supply. Similarly, if there's a lot of selling pressure, prices can drop fast -- especially if there's a liquidity event (which is most likely what happened over the weekend).

Some investors buy Bitcoin using leverage, which can amplify gains on the upside but also magnify losses on the downside. An exchange may force liquidation if a user's balance falls below the maintenance margin, which is the level required to keep the leveraged trade active.

Collective forced selling can trigger rapid declines in asset prices, not because investors are actively selling, but because leverage is causing forced liquidations. This mechanical selling can also happen in the stock market, like in 2020 when COVID-19 pandemic fears triggered a staggering 28.5% drawdown in the S&P 500 between March 4 and market close on March 23.

Similarly, market mechanics and margin calls are partly to blame for Bitcoin's latest swift, steep sell-off.

Buying Bitcoin for the right reasons

Unlike investing in corporations, Bitcoin doesn't have earnings, a board of directors, or a management team. So, instead of the investment thesis evolving based on what the company is doing, Bitcoin's investment thesis has more to do with the intrinsic value of Bitcoin, as well as Bitcoin's adoption by institutional and retail investors and central banks.

Before even considering buying Bitcoin outright or through an ETF, it's best to take a step back and make sure you're buying it for the right reasons. Bitcoin has made long-term investors rich at the expense of extreme volatility and massive downturns.

Enduring those drawbacks requires conviction in Bitcoin's value as a decentralized means of exchange that is easily transferable, divisible, inherently scarce with a fixed supply, secure, and able to grow as a store of value as adoption increases over time.

If you don't believe in those factors, it may not be worth buying at all. But if you do, then the choice between buying Bitcoin outright or a Bitcoin ETF is easy.

Reasons to buy Bitcoin ETFs

Bitcoin ETFs are a better choice for investors who want to buy Bitcoin through a brokerage account, especially if it's a retirement account.

Buying the iShares Bitcoin Trust ETF in a tax-advantaged retirement account, like an individual retirement account (IRA) or Roth IRA, allows Bitcoin to grow tax-deferred. Selling Bitcoin in a retirement account doesn't automatically trigger a taxable gain, whereas buying and selling Bitcoin through a cryptocurrency exchange or in an individual brokerage account does.

So if you're looking for ultra-long-term Bitcoin exposure, buying a low-cost ETF like the iShares Bitcoin Trust ETF through a retirement account is the way to go.

Daniel Foelber has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bitcoin and iShares Bitcoin Trust. The Motley Fool has a disclosure policy.