In making direct Bitcoin purchase, you actually buy Bitcoin. But buying Bitcoin ETFs, you ain’t actually buy Bitcoin instead you buy exposure to the Bitcoin price. Bitcoin ETFs track Bitcoin price by prediction under centralized control. The largest spot Bitcoin ETFs track price performance of Bitcoin on a nearly 1:1 basis. Yet Bitcoin market is very volatile as it fluctuates over a short time making it hard to track.
Bitcoin is the currency and commodity. Thus there are times you might need access to Bitcoin as a currency to pay for an item online. So if you held Bitcoin ETFs you wouldn’t be able to do that unless you sell it and pay for such item in dollar maybe. In fact the only way you truly own an asset is to posses its cryptographic keys. So if somebody else do possess such keys then the asset is not truly owned by you. For Bitcoin ETFs these cryptographic keys belong to the ETFs issuers and not you. So anything happens in centralized ETFs then it’s the issuers and not you who will decide what to do with it at first.
Bitcoin ETFs purchase Pros are;
Suits traditional investors with nontechnical insights (crypto wallet and blockchain) of crypto market. ETFs are under centralized control hence subjected to regulatory scrutiny as it offers security layer and ensure investor’s peace of mind. Saving time and costs of exchanging and securing Bitcoin by oneself. Making sense for investment goal of long term price performance.
Its Cons are;
Investors own without full controls of underlying Bitcoin. Investors are charged by issuers for management fees or expenses. Not suitable for short term price performance.
Direct Bitcoin purchase Pros are;
Suits investors with concerns about the regulatory or legal aspects of crypto. Crypto asset ownership and full control is higher. Investors can use it as a currency and commodity. The price prediction is much easier. Making sense for short and long term investment goals.
The Cons are;
Suits investors with technical insights of crypto market. Needs investor’s attention to custody security concerns.
