Cryptocurrency prices, including bitcoin (CRYPT: BTC)have been hit over the past few months as investors have shifted from more speculative to safer investments. With the threat of tariffs rearing their ugly head again and investors worried about how artificial intelligence (AI) could disrupt established companies and industries, the desire to own digital currencies is declining.
The result is that Bitcoin has plummeted, and I think there is reason for investors to put their money in a broad market exchange-traded fund (ETF) right now. He Vanguard S&P 500 ETF(NYSEMKT:VOO) It’s my personal favorite. Here’s why it’s a better buy than Bitcoin this year.
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It wasn’t long ago that investors had a seemingly insatiable appetite for riskier investments. Consider that the price of Bitcoin reached its all-time high of over $126,500 in October, before the recent cryptocurrency sell-off caused its price to drop to approximately $69,000 at the time of writing.
There is no single factor that caused the pullback, but rather a general skepticism about some AI stocks, uncertainty about where the economy is headed amid geopolitical uncertainties, and President Donald Trump’s announcement of new global tariffs of up to 15%, just after the Supreme Court struck down his previous round of tariffs.
Additionally, layoffs in January were the highest for that month in 17 years, and the World Economic Forum recently said that 41% of global companies expect to reduce their workforce over the next five years due to artificial intelligence.
Bitcoin had been booming in a post-Covid world where tech stocks were soaring and early AI optimism helped lift digital currency prices. But now some investors have a feeling that the economic winds could be changing and have reduced their investment in Bitcoin, along with many other cryptocurrencies and other speculative investments, including quantum computing stocks.
Source: YCharts.
While Bitcoin is down about 23% over the past year, the Vanguard S&P 500 ETF has been slowly and steadily rising more than 16%.
The background follows the S&P 500So if the market does well, the fund tends to do well too. The benefit of having your money spread across the 500 largest publicly traded companies in the US is that you have the potential to benefit from many growth areas, including artificial intelligence, healthcare, consumer spending, industrial production, and more.
This strategy has, historically, been very good. Since its creation in 2010, the fund has had an average annual return of 14.8%. Of course, there’s no guarantee you’ll receive those returns in any given year, but it does show that fund diversification can generate impressive returns when multiple economic sectors do well.
Some investors don’t like passive investing in ETFs and want to be able to personally select stocks and cryptocurrencies for their portfolio. I understand the appeal and there is nothing wrong with that strategy. But it becomes difficult when, as now, the direction of the economy and many industries is confusing.
That’s why buying this Vanguard ETF makes sense right now. While other investors try to determine which sectors and companies will benefit or be dismantled by AI, or how tariffs will affect industrial companies in the coming years, you can put your money in a fund that spreads your investments across a basket of stocks.
Not only will you be well diversified, but you’ll also pay a very low annual expense ratio of just 0.03%, compared to the average S&P 500 fund fee of 0.41%. That means for every $1,000 invested in the fund, you’ll pay just $0.30 a year.
I don’t think Bitcoin is a bad investment, but with 2026 already off to an uncertain start, purchasing the Vanguard S&P 500 ETF may look like a smart move several years from now.
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Chris Neiger has positions in the Vanguard S&P 500 ETF. The Motley Fool has positions in and recommends Bitcoin and the Vanguard S&P 500 ETF. The Motley Fool has a disclosure policy.
Best Buy in 2026: Bitcoin or a Broad Market ETF? The Answer Couldn’t Be Clearer for Long-Term Investors Originally Posted by The Motley Fool
