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
- 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.
- Market Volatility: bitcoin 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
- 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.
- 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, potentially missing out on certain benefits such as the tax deferred advantages you get owning BTC inside of a self directed IRA with a company like iTrustCapital.
The choice between direct bitcoin investment and Bitcoin ETFs depends on individual preferences and risk tolerance. Both options have unique benefits and drawbacks that should be carefully considered.
For those interested in bitcoin and other cryptocurrencies, platforms like iTrustCapital provide the opportunity to buy and sell crypto, including bitcoin, in a retirement account like a tax-advantaged Crypto IRA. This combines the growth potential of digital currencies with the tax benefits of an IRA, offering an attractive route for portfolio diversification.
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This article is for information purposes only. It does not constitute investment advice in any way. It does not constitute an offer to sell or a solicitation of an offer to buy or sell any cryptocurrency or security or to participate in any investment strategy.
iTrustCapital is a cryptocurrency IRA software platform. It is not an exchange, funding portal, custodian, trust company, licensed broker, dealer, broker-dealer, investment advisor, investment manager, or adviser in the United States or elsewhere. iTrustCapital is not affiliated with and does not endorse any particular cryptocurrency, precious metal, or investment strategy.
Cryptocurrencies are a speculative investment with risk of loss. Precious metals are a speculative investment with risk of loss. Cryptocurrency is not legal tender backed by the United States government, nor is it subject to Federal Deposit Insurance Corporation (“FDIC”) insurance or protections. Clients do not receive a choice of custody partner. The self-directed purchase and sale of cryptocurrency through a cryptocurrency IRA have not been endorsed by the IRS or any regulatory agency. Historical performance is no guarantee of future results.
Some taxes and conditions may apply depending on the type of IRA account. Investors assume the risk of all purchase and sale decisions. iTrustCapital makes no guarantee or representation regarding investors’ ability to profit from any transaction or the tax implications of any transaction. iTrustCapital does not provide legal, investment or tax advice. Consult a qualified legal, investment, or tax professional.
iTrustCapital makes no representation or warranty as to the accuracy or completeness of this information and shall not have any liability for any representations (expressed or implied) or omissions from the information contained herein. iTrustCapital disclaims any and all liability to any party for any direct, indirect, implied, punitive, special, incidental or other consequential damages arising directly or indirectly from any use of this information, which is provided as is, without warranties.
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