Bitcoin (and recently Ethereum) Spot ETFs are almost guaranteed to get approved as we have massive names like Fidelity and BlackRock that are on the list.
And we all know that BlackRock gets what BlackRock wants whenever they ask, that is neither here nor there.
The Two Sides
Many have been a big advocate for Bitcoin spot ETFs but many are also against it for the reason being is that they are predatory — the true intent and purpose of Bitcoin was to allow regular people like you and me to actually have complete ownership of our money.
I do understand that a Bitcoin spot ETF might be good for a select few people — maybe the older generation want to have exposure to Bitcoin without having to create a wallet because self custody is hard. But the reason why self custody is so hard is because you get a great reward for actually holding on to your assets. And in fact, when you custody your own crypto assets, it does not really cost you anything.
However, an article was just posted about some of the Bitcoin spot ETF fees and the post came from Bitcoin News.
And it is kind of common knowledge that traditional financial products like ETFs charge you about a 1% fee essentially to “manage” your assets.
Another thing people do not talk about is the management or entity that is custodying your assets — if they happen to file for bankruptcy and they are not bailed out, you could lose those assets (but that is a topic for another time).
ETF Fees vs. Holding Your Bitcoin Comparison
Let’s talk about some of the fees for a Bitcoin spot ETF and how it compares to just actually holding your own Bitcoin and being responsible.
Let’s assume you are living in the US and the balance after 30 years for self custody is 100% but for an ETF, it is 73.97%. And for an IRA (Individual Retirement Account) fee plus the ETF fee, it is 54.55% after 30 years.
Yes you read that correctly — so if you have a Bitcoin spot ETF, you are going to get charged an IRA fee PLUS the ETF fee; and you are going to lose almost 50% of your Bitcoin. Even if you just hold the Bitcoin spot ETF with just the ETF fee, you are going to lose about 25% of your Bitcoin as opposed to retaining 100%.
So again I understand the arguments for wanting to have a Bitcoin spot ETF and trusting somebody else to custody your Bitcoin for you. But at the end of the day, that is not Bitcoin’s true intended purpose and it is just more than a predatory tactic from the traditional financial institutions that are coming in and taking from the retail investors.