Is Bitcoin ETF really the best to hold?

[Ambatman]

I'm not trying to undermine the impact the ETF has/would have on Bitcoin, especially as a form of advertising mechanism and providing some element of legality to it.

I still don't understand why one would prefer owning an ETF rather than holding the true thing (Bitcoin).
Bitcoin ETF is more expensive to hold with fee ranging from 0.2% to 1.5% than one holding the real Bitcoin
Not to mention unlike Bitcoin, it isn't permissionless nor does it provide any private key that shows one is the sole owner.

I know that it could serve as a bridge to bring to the awareness of individuals about Bitcoin and maybe let them realise its utility and start using it.

But I'm still curious why individuals would prefer to own an ETF rather than Bitcoin itself?  Does it stem from their mistrust against anything that goes against the norm?

Note: My question stems from my miniscule understanding of ETF.Clarifications would be appreciated.  

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[un_rank]

But I'm still curious why individuals would prefer to own an ETF rather than Bitcoin itself?  Does it stem from their mistrust against anything that goes against the norm?

Not all investors can gain exposure to bitcoins directly. For us regular investors, you can just log in to an exchange and buy bitcoins. Some institutions and enterprises cannot, they will go through too many legal hoops to acquire and store bitcoins like you do, they are the ones who would most utilize ETFs.

Some other use it cause they do not want to carry the responsibility of holding their investments themselves, but rely on a third party.

- Jay -

[franky1]

its mainly pension investors
by putting your PRE-TAX income into a ETF you save 20-40% on a purchase because its PRE-TAX income buying the shares

and in many years when its time to sell(claim your pension) you dont suffer capital gains so another X% saving, because its in a pension scheme

ETF shares are NOT a claim of ownership of indirect BTC
ETF shares are a share of a trust thats valuation is pegged to a bitcoin PRICE of total coin owned by the ETF
you cannot as a end-user investor ask to convert share to BTC

its purely a share deal shadow tracing the bitcoin PRICE

[Blitzboy]

I find the idea confusing. Why buy something more expensive and less autonomous? Bitcoin's permissionlessness and private key control define it for me. Hodling actual assets is my preference, not ETFs.

A common claim is that ETFs introduce Bitcoin to folks who are wary of cryptocurrencies. I know - comfort and familiarity. But isnt Bitcoin's main goal to bypass traditional banking systems? ETFs seem to dilute revolution.

I think the desire for Bitcoin ETFs over Bitcoin may arise from a mistrust or ignorance of Bitcoin. Maybe its about security within the usual investment framework. Regardless, an ETF doesnt appeal to a Bitcoin enthusiast. I believe in direct ownership, where Bitcoin's actual value may be realized.

[Oshosondy]

Bitcoin ETF is not bitcoin but an asset that has the spot price of bitcoin. The best to hold for me is bitcoin and not bitcoin ETF because I will prefer to hold what I have complete control over.

and in many years when its time to sell you dont suffer capital gains so another X% saving, because its in a pension scheme

All I know is that everything is taxed in USA. You mean that those that hold bitcoin ETF shares will not later be taxed if they want to sell it?

[bobbybkk]

I think it depends on your preferences:

If you have a range of assets all handled by a major bank and you wish to add exposure of Bitcoin it makes sense to simply add Bitcoin ETF to your other ETF..... no extra worries on your side...

If you wish to hold Bitcoins as an alternative to the regular banking system and want total control, then it is better have real Bitcoins in a cold wallet or so. But here you need to pay attention what you do, you can easily make your money disappear, if you misplace your private key or so....

[Zlantann]

But I'm still curious why individuals would prefer to own an ETF rather than Bitcoin itself?  Does it stem from their mistrust against anything that goes against the norm?

Note: My question stems from my miniscule understanding of ETF.Clarifications would be appreciated.  

Many people are used to centralized platforms like banks and the stock exchange. They feel more secure to invest in sectors that the government has some level of control over. They trust that these platforms will manage their money more than themselves. Another issue is that many people don't also want to take responsibility for learning about the Bitcoin space because they think that it is complicated. So they prefer to use third-party platforms to help them keep their funds safe.

There is also the claim that using ETF as security or collateral in accessing loans will be more flexible. Others also think that it is easy and less complicated to transfer such ETF holdings to successors.

Most of these claims are products of ignorance. If these ETF investors knew more, they wouldn't put their funds in centralized platforms that cannot be trusted.

[promise444c5]

But I'm still curious why individuals would prefer to own an ETF rather than Bitcoin itself?  Does it stem from their mistrust against anything that goes against the norm?

Remember  buying ETFs is more like buying  share but not inform of a normal financial share , investors could hold for a long time if they want without any restrictions.
Although,its sounds more of what a normal Wallet could do but I think people go for it as they could easily  follow the market trend  buy  and  sell at anytime they want without having  to deal with exchange .
However, we should always remember this, so far you partner with a third party to invest or hold your coin , you still don't  have total control over your investment.

[MAAManda]

But I'm still curious why individuals would prefer to own an ETF rather than Bitcoin itself?

There are countless possibilities as to why an individual would prefer an ETF over Bitcoin itself, the most reasonable being security reasons. On centralized and legal platforms, it's always protected by law. So, if something unexpected happens to the platform, then individuals as clients of the platform will receive fund protection. Another possibility could come from individuals complex ignorance about Bitcoin, so they prefer a safe zone.

[Solosanz]

Many people don't care whether they own private key or not because they're trust more in centralized institutions than online projects, especially when they can't hold their own private keys safely due to careless or too technical.

As long as the fees doesn't exceed the profit, they still earns right?

and in many years when its time to sell you dont suffer capital gains so another X% saving, because its in a pension scheme

All I know is that everything is taxed in USA. You mean that those that hold bitcoin ETF shares will not later be taxed if they want to sell it?

I also have a same thought, but he's correct.

Are There Any Tax Considerations When Using ETFs in a 401(k)?
In a 401(k), tax considerations are generally less relevant because contributions and earnings can grow tax-deferred if contributions are made pre-tax. For after-tax contributions, taxes are deferred until you withdraw funds from the account (i.e. when you retire).

Taxation of Withdrawals

Withdrawals of contributions and earnings are not taxed provided it’s a qualified distribution – the account is held for at least 5 years and made:

On account of disability,
On or after death, or
On or after attainment of age 59½.

[btc78]

Well bitcoin etf will mostly be utilized by big corporations they used to have too many rules and regulations regarding a company holding bitcoin but with etf they can now purchase bitcoin easily

Huge corporations investing in bitcoin will surely attract attention towards the coin making it more well-known among the public

I am sure some individuals would also purchase bitcoin etf instead of the actual bitcoin because of security concerns

[ImThour]

People who are invested in ETFs are boomers, way boomer than the boomers which we have on this forum and I am sure they are directly exposed to Bitcoin instead of these ETFs.
I do not like the idea of ETFs however, the more they realize that they could have just bought the actual Bitcoin, the sooner they will do. It's great overall for the exposure of Bitcoin.

[BenCodie]

I'm not trying to undermine the impact the ETF has/would have on Bitcoin, especially as a form of advertising mechanism and providing some element of legality to it.

I still don't understand why one would prefer owning an ETF rather than holding the true thing (Bitcoin).
Bitcoin ETF is more expensive to hold with fee ranging from 0.2% to 1.5% than one holding the real Bitcoin
Not to mention unlike Bitcoin, it isn't permissionless nor does it provide any private key that shows one is the sole owner.

I know that it could serve as a bridge to bring to the awareness of individuals about Bitcoin and maybe let them realise its utility and start using it.

But I'm still curious why individuals would prefer to own an ETF rather than Bitcoin itself?  Does it stem from their mistrust against anything that goes against the norm?

Note: My question stems from my miniscule understanding of ETF.Clarifications would be appreciated.  

There are very little benefits that outweigh just holding BTC in a non-custodial wallet. There might be arguments that there is more liquidity from the institutions, or convenience, or maybe even insurance. Though I wouldn't call any of those theories any reason to hold or buy ETF Bitcoin over that of holding it in a wallet.

You might be able to trade it with the most perceived trust as you can do it on a stock exchange, and the product is created by some of the worlds largest institutions...though this might only be a benefit to those who are trading or who are not looking to buy and hold. Even such, it is arguable to choose the ETF over a real spot market, like on Coinbase, or Binance...if you are looking to trade. Or moreover, using a decentralized exchange where you can trade with more control over custody.

It can serve as a bridge for more awareness, accessibility and credibility for Bitcoin as a whole. Though I wouldn't call it a better instrument to hold or trade Bitcoin.

[blckhawk]

and in many years when its time to sell you dont suffer capital gains so another X% saving, because its in a pension scheme

All I know is that everything is taxed in USA. You mean that those that hold bitcoin ETF shares will not later be taxed if they want to sell it?

I think what @franky1 means is that if you use put your money that's supposed to go to a pension fund towards an ETF then it won't be taxed kind of like what they do with Roth IRA, it's a better retirement plan than the basics in US. Probably those that won't maximize how they'll get their ETFs will probably get taxed.

[mindrust]

The ETF is for the tech illiterate people. Even the people who think they are informed about bitcoin lose their coins every day. We hear about them all the time. Imagine how would those rich boomers feel against bitcoin. They are totally clueless. Some of those people still want a piece from the action but they are afraid of holding btc in their wallets. These people want safety and protection. That’s why they are buying the ETF instead of the real deal. I totally understand their point of view because like I said even some the most proficient bitcoiners lost their wealth because they got hacked or they were careless.

[0t3p0t]

But I'm still curious why individuals would prefer to own an ETF rather than Bitcoin itself?  Does it stem from their mistrust against anything that goes against the norm?

Well, investors especially those that poured their funds on bonds and stocks were for me the one who will make a move to trust the SEC approved Bitcoin ETF. They prefer to invest on it as it is safer than the decentralized Bitcoin that runs without any regulation. Investors are just playing safe here I think.

[franky1]

and in many years when its time to sell you dont suffer capital gains so another X% saving, because its in a pension scheme

All I know is that everything is taxed in USA. You mean that those that hold bitcoin ETF shares will not later be taxed if they want to sell it?

its NOT a special thing due to being "bitcoin ETF"
the tax thing is about.. and ill say it again PENSION PLANS where your employer puts part of your income into a pension plan before tax.
and because its a pension plan you dont pay ongoing capital gains tax in a pension plan.

you might want to learn how pension plans work as thats the only reason many people would invest in an etf rather than buying real bitcoin separately with their normal income

[Hallroom]

Amid fears of Bitcoin ETF approval, investors are holding onto Bitcoin and hoarding it. But after the approval of Bitcoin, the price of Bitcoin has not shown any signs of improvement, but it is normal that the current price of Bitcoin is low. Because this year 2024 there is a lot of good news in Bitcoin so the price of Bitcoin is likely to increase to the highest level.

[criptoevangelista]

Most people who buy ETFs are traditional market people who have no idea how bitcoin works, or they are people who want to diversify their investments.

These people's knowledge about the fundamental part of bitcoin is zero and they think that bitcoin is a simple virtual asset, so they choose not to get involved too much, this way it is easier to acquire through ETFs.

[franky1]

Most people who buy ETFs are traditional market people who have no idea how bitcoin works, or they are people who want to diversify their investments.

These people's knowledge about the fundamental part of bitcoin is zero and they think that bitcoin is a simple virtual asset, so they choose not to get involved too much, this way it is easier to acquire through ETFs.

trad-fi people that invest in wheat commodities do not understand how to farm/harvest wheat. the reason they invest in commodity trades of wheat instead of running a farm is because yes they dont understand how to farm, but they get better tax breaks and able to play the markets without needing to concern themselves with fertiliser and seed planters

but most of the population dont day-trade the market most just dump their pre-tax income into pension plans to get tax breaks on investments that hedge against inflation long term, without needing the hassle of learning how to farm, protect the land, maintain their property