Is Bitcoin Spot ETF a good investment?
Your financial and investment goals will determine whether a spot etf will be good for you.
Below is a comparison between the advantages and disadvantages of a Bitcoin spot etf.
Hopefully, these will help you make a decision whether to invest in Bitcoin spot etf.
What are the advantages of a bitcoin spot etf?
Investors exposure to crypto through a streamlined investment process.
It makes it simple to add crypto assets to your portfolio.
Many asset management and investment companies such as BlackRock and Ark Invest have invested heavily on having expert research teams
that deliver data driven insights into the crypto asset market.
Thus you will be able to grow your crypto investment knowledge faster.
Investors can buy and sell shares through most traditional brokerage accounts at prices dictated by the market.
Your assets are protected through the best-in-class security solutions which leverage cold storage, audit trails, whitelisting and multiple private keys.
Investors are able to easily diversify their crypto portfolio.You can use individual investment company's basket products to invest across multiple asset types.
A Bitcoin Spot ETF also offers a cost-effective and safe way to diversify an investment portfolio by acquiring exposure to an index or asset class.
One does not need to acquire new skills to make money.
All you need is to have exposure to Bitcoin on an ETP and you are ready to start investing and earning money.
You can have exposure to crypto at the comfort of your traditional financial investment institutions which make it familiar.
You do not need to learn skills on trading such as reading candle stick charts,fibs, technical analysis etc.which you require when trading crypto both as an
asset and Futures.
You can invest with confidence since crypto exchange traded products are fully backed 1:1 collateral reserves.
You also do not have to go to the risk of loosing your crypto through hacks especially through self custody.
Many people have lost their crypto worth millions through depositing or transferring their crypto to and from their wallets, to and from the crypto exchanges.
Investors are able to gain exposure to BTC in the form of a security while avoiding the challenges of buying, storing, and safekeeping BTC, directly on their wallets.
What are the disadvantages of Bitcoin Spot ETF?
Before you make this decision of investing in Bitcoin Spot ETF, it is important to understand the essence of blockchain technology which Bitcoin is a part of.
Bitcoin is a blockchain technology where transactions can be verified, they are open meaning that they are public and decentralized.
Anyone can have access to these records.
Therefore there is no room for manipulation which often comes with centralized institutions whose records are available to a chosen few.
Thus, buying shares through a Spot Bitcoin ETF goes against the fundamentals of the block chain which is decentralization, since you will be acquiring a
share of the asset from a centralised traditional financial institution that can be controlled and manipulated without any one including you knowing it.
Thus the best and surest way to be in Bitcoin is to have your own as an asset and thus the need to be in a cryptocurrency exchange such as
Binance the number one crypto exchange platform in the world.
On the other hand, if you are new and want some exposure first to know if you need to be in crypto, then getting into a Bitcoin Spot ETF is one way to start.
This however should not be the end result.
Another disadvantage of a Bitcoin Spot ETF is that you need to have a broker in order for you to invest as is required by many asset management and
investment companies.
This means that you will incur extra expenses on having a broker as well as a financial professional to give you financial advice.
This means that you will make investment decisions not by yourself but through a professional who may not necessarily know or be sensitive to your
financial and investment goals and objectives.
It also means that you are not able to invest at any time because most brokers have time limits when they are open and when they are closed.
This is unlike having Bitcoin as an asset from a crypto exchange where crypto is traded every second of every minute 24 hours every day.
You can trade any time without going through any brokerage account or broker.
The Total Expense Ratio (TER), which shows the entire cost of holding an ETF for a year, is another drawback of owning Bitcoin Spot ETF.
The main components of it are management fees along with extra fund costs like trading, legal, auditor, and other operating costs.
It seems that it would be much cheaper and less inconveniencing if you would just get the Bitcoin asset from any crypto currency exchange.
It does not matter how long you hold it and the only expense you will incur is very minimal trading fees and gas fees for holding your own Bitcoin on a hot or
cold wallet. Trading fees are as low as 0.01%.
What other ways can you invest in Bitcoin?
Apart from having exposure to Bitcoin as a spot etf through investment companies,there are other ways that one invest in Bitcoin.
Investing in Bitcoin as an asset that you have full ownership of.
We have investing in Bitcoin itself as an asset that you hold and are in possession of meaning you have self custody to it.
This is known as spot trading and is done at any crypto exchange such as Binance.
You hold the actual Bitcoin asset.
You can also have bitcoin by swapping altcoins.
This you do at a decentralised exchange such as Pancake swap by Binance, Uniswap by Ethereum, etc.
The avantages of having Bitcoin as an asset as compared to an etf is that you can be able to conduct transactions with it and make payments worldwide.
Many businesses and institutions all over the world such as banks are now accepting payments using crypto.
An example of this new and exciting way is through BitPay, where thousands of businesses and banks, including mortgage lenders, are able to accept direct
crypto payments using any token or coin.
BitPay is a bitcoin payment service provider headquartered in Atlanta, Georgia, United States.
It was founded in May 2011 by Tony Gallippi and Stephen Pair. BitPay provides Bitcoin and Bitcoin Cash payment processing services for merchants.
BitPay supports, including Bitcoin (BTC), Bitcoin on the Lightning Network, Ethereum (ETH), Bitcoin Cash (BCH), Dogecoin (DOGE), Shiba Inu (SHIB), Litecoin (LTC).
Another advantage of having crypto as an asset is that you can also use crypto as collateral for loans and mortgages.
This is known as crypto lending.
It uses digital assets as collateral and provides borrowers a loan in exchange for liquidity.
This process is similar to using physical assets, like your house, for a mortgage loan.
The crypto loan amount is typically a loan-to-value (LTV) ratio of the cryptocurrencies you're using as collateral.
Many banks have embraced crypto as a way to build a name for themselves.
You can get insurance for your businesses using Bitcoin.
They also offer credit and debit cards for enable you to make purchases using Bitcoin.
They offer cashback and rewards on purchases paid in Bitcoin.
You can be able to make purchases using crypto.
Cryptoemporium
is an online store where you can find all the above items and more.
You can buy and even sell your products there.
They accept these crypto currencies:
Bitcoin
Ethereum
USDT
XRP
Dogecoin
Litecoin
Dash
Purchases that you can make include but not limited to:
Cars such as Lambourghini Urus, Tesla, classic cars. etc.
Watches
Clothes
T shirts
Houses/real estate
Laptops/computers
Motor bikes
Playstations
Art work etc.
Jewelry
Pet supplies and products
Websites/domain names
The list is endless…
How amazing is that!
Cryptoemporium have been using crypto
payments for goods since 2018.
You can also lend out your Bitcoin asset to earn interest through staking, lending out to other traders and earn interest.
With a Bitcoin Spot ETF you are not able to do this since you will have shares of the Bitcoin and not the actual asset.
In addition your Bitcoin Spot ETF will be tied down to a traditional Financial investment institution which is centralized and you will have no control whatsoever.
You will not even be able to move your Bitcoin Spot ETF from one company to another.
You do not have any control over your Bitcoin.
Another advantage of having Bitcoin as an asset is that you will be able to make payments and purchases using crypto credit and debit cards.
You are able to get cash backs on your purchases.
There are some crypto debit cards on the market.
They include:
Crypto.com Visa Card
Coinbase Card
Robinhood Cash Card
Binance Visa Card.
You can use any of these cards to spend cryptocurrency at open merchants and get cryptocurrency rewards for your purchases.
