Crypto’s latest selloff pushed Bitcoin below $70,000 this month and erased trillions in market value since late last year — a reminder of how quickly sentiment can shift.

For long-term believers, these pullbacks can look like opportunity. But if you’re going to buy the dip, there’s a key question: What’s the best way to invest — buying crypto directly, or buying funds like ETFs that track crypto?

Both approaches give you exposure to the same underlying asset, but they work very differently. Here’s why you might want to go one route versus the other. (You can do either through SoFi.)

Option 1: Purchase Crypto Directly

This means purchasing coins or tokens through a crypto platform and storing them in a digital wallet. The main benefit is that you actually own the asset, so you can send crypto, stake it, interact with decentralized finance apps, or participate in blockchain ecosystems.

On the other hand, there’s significantly more responsibility when you own the coins. Lose track of your private keys and you could forfeit access to your crypto forever. Hacks and scams remain risks. There’s also a learning curve — setting up wallets, understanding blockchain transactions, and navigating exchanges — which can be intimidating. And some crypto exchanges don’t offer the same level of oversight as traditional securities markets. (At SoFi, digital assets are held on your behalf in a custodial wallet with institutional-grade security.)

Option 2: Purchase Crypto ETFs or Mutual Funds

Crypto ETFs (exchange traded funds) and mutual funds have surged in popularity since regulators approved the first spot Bitcoin ETFs in the U.S. in 2024. They trade on traditional stock exchanges but track the value of digital assets. (The fund holds the coins — you hold shares of the fund.)

The primary advantages are straightforward: You can buy shares of a fund through a brokerage account without managing wallets or private keys. Because they trade on regulated exchanges, they may provide some reporting and investor protections — though you may not always get the same level of coverage as with traditional investments. They can sit alongside stocks and bonds in a traditional investment portfolio, however, making them easier to track and manage.

The drawbacks are that you don’t own the underlying crypto. There are often management fees (though, of course, crypto transactions on exchanges also incur fees). And funds may reflect the performance of a combination of coins and other assets, rather than a single token.

How You Invest Matters as Much as What You Invest In

Some factors to consider: how hands-on you want to be, whether you’re interested in crypto as a technology or purely as an asset class, and how easily each option fits into your broader portfolio strategy.

Direct ownership may make sense if you:

•   Want to directly own and use crypto

•   Don’t want to pay fees to fund managers (though platform and trading fees may still apply)

•   Participate in the crypto ecosystem

ETFs or other funds may make sense if you:

•   Want simpler exposure

•   Prefer a brokerage

•   Don’t want to manage security

You can also split the difference — holding crypto directly while also using funds for easier portfolio management, especially in retirement accounts.

Whichever route you choose, the key is your perspective. Crypto’s volatility can create opportunity, but it also raises the stakes. The decision isn’t just whether to buy the dip — but determining how crypto fits into your broader investing strategy.

Please understand that this information provided is general in nature and shouldn’t be construed as a recommendation or solicitation of any products offered by SoFi’s affiliates and subsidiaries. In addition, this information is by no means meant to provide investment or financial advice, nor is it intended to serve as the basis for any investment decision or recommendation to buy or sell any asset. Keep in mind that investing involves risk, and past performance of an asset never guarantees future results or returns. It’s important for investors to consider their specific financial needs, goals, and risk profile before making an investment decision.

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