SpaceX Is Now Worth $2.4 Trillion, Making It Twice as Valuable as Bitcoin. But Here's Why I'm Still Buying Bitcoin.

Elon Musk's rocketry business is off to a great start on the public stock market. One holiday-shortened week after its initial public offering, Space Exploration Technologies (SPCX 3.44%) is up 14.9% from last Friday's closing price. With a market cap of $2.43 trillion, it's nearly equal to "Magnificent Seven" member Amazon and about twice as valuable as Bitcoin (BTC +0.98%), which is currently sitting at $1.24 trillion.

So, Wall Street is excited about SpaceX while Bitcoin is taking a beating. As of June 19, the largest cryptocurrency is down 28% year to date and just 6% above early June's multiyear lows.

But I'm not giving up on Bitcoin. Trading at 130 times trailing sales, I'm not interested in the speculative SpaceX stock today. I'd much rather invest in a financial tool for the future at this unsustainably low price.

In fact, I bought into another Bitcoin-based exchange-traded fund (ETF) on June 5, just days before the SpaceX IPO. Here's why I'm putting real money in cryptocurrencies while staying away from the SpaceX hype.

Why I skipped the SpaceX IPO and bought more Bitcoin in June

I boosted my Bitcoin-based holdings by 23% in early June.

I wanted some exposure to the recently launched Morgan Stanley Bitcoin Trust, an ETF with annual fees of just 0.14%. That's the lowest cost margin in the Bitcoin business, ahead of 0.19% in the Franklin Templeton Digital Holdings Trust and 0.2% for the Bitwise Bitcoin ETF.

But I wasn't just optimizing my ETF fees. The crypto market looked radically undervalued that week, and it still does today. The Bitcoin portion of my total investment portfolio (actual Bitcoin plus three spot-price ETFs) was just 3.8%. That's comfortably within the 1% to 5% Bitcoin exposure recommended by financial powerhouse Morgan Stanley in 2024.

After the Morgan Stanley ETF purchase, I'm near the top of the professionally recommended range with 4.7% Bitcoin exposure. I'm not betting the proverbial farm, but my portfolio takes Bitcoin seriously.

Rockets are cool, but...

I already talked about SpaceX's frothy valuation. Early investors are building a trillion-dollar castle in the financial clouds, based on skyrocketing revenue growth and a heavy cash burn. The xAI segment's data centers are expensive to build and to operate, with limited financial returns for this asset-heavy effort.

Look, SpaceX is cool. Rockets are awesome. Musk's engineers landing boosters on drone ships like it's a video game? I nerd out about this stuff. But "cool" isn't an investment thesis, and neither is a 130 price-to-sales ratio.

Meanwhile, Bitcoin is having a rough year, ringing bells in my opportunistic lobes. The big banks apparently agree with me now. JPMorgan Chase, Citi, Morgan Stanley, and Bank of America are all recommending Bitcoin exposure to wealthy clients. When the suits in Manhattan start telling their richest customers to buy something that used to be toxic in the traditional banking world, things are changing.

Mining economics also put a floor under Bitcoin's downside. Bitcoin's market price is currently below production costs. Miners operate at a loss. This creates two possible outcomes: Prices recover to restore profitability, or miners exit the market to spend their electricity supply on AI computing for a while. Fewer miners will reduce the new supply. One way or the other, Bitcoin prices should bounce back over time.

So I'm not chasing rockets with SpaceX stock. At these prices, Bitcoin looks like the better long-term bet.