Investing in bitcoin and Bitcoin ETFs presents different opportunities and challenges. Below are the pros and cons of each, allowing you to make an informed decision based on your investment goals and risk tolerance.
Buying Bitcoin Directly
Pros:
24/7/365 Days a Year Access: This around-the-clock availability ensures you can buy and sell bitcoin instantly during market changes any day of the year, maximizing opportunities for profit and risk of loss over your investments.
Complete Ownership: Direct investment means you own the actual bitcoin, giving you full control over your investment.
No Intermediary: Direct purchase eliminates the need for a fund manager or intermediary.
Cons:
Market Volatility: Bitcoin’s prices can be volatile.
Custody: Self-custody can create issues. Platforms like iTrustCapital offer a solution by providing institutional-level custody management. This approach mitigates the complexities and risks associated with self-custody.
Investing in a Bitcoin ETF
Pros:
Mass Adoption: Investing through an ETF broadens bitcoin adoption and in general makes it more mainstream.
Regulated Environment: ETFs are subject to regulatory oversight.
Custody: Investors don't have to deal with custody as they do not actually own the BTC, but instead own a share in the ETF.
Cons:
Market Hour Limitations: Trading ETFs is restricted to market hours. Unlike bitcoin, which can be traded 24/7 - 365 days of the year. This gives you 80% more access opportunity than trading within the NYSE trading hours and holidays. Trading is limited to 251 days of the year and within a 6.5 hour window.
Management Fees: Investing in Bitcoin ETFs may incur higher fees compared to direct Bitcoin purchases. Specifically, the management fees for the 11 approved Bitcoin ETFs vary, ranging from 0.20% to 1.5% annually. This is in addition to any transaction fees that may apply. In contrast, holding bitcoin directly on platforms such as iTrustCapital doesn't involve any management fees.
Lack of Direct Ownership: Investors in Bitcoin ETFs don't own the actual bitcoin. #ETFvsBTC
