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đ Spot On! The Spot Bitcoin ETFs
Yesterday, 11 spot Bitcoin ETFs finally got approved! These are investment vehicles that allow traditional investors to get exposure to the bitcoin price without holding the asset themselves.
Why is this a big deal?
There have been billions of dollars on the sidelines from family offices, funds, etc. waiting to invest through an ETF. The impact on Bitcoin will be huge now that this money can start flowing in. By Galaxyâs estimation, this could be as much as $14 to $39 billion in the first three years.
Also, donât forget that the traditional and regulated framework of these ETFs will enhance Bitcoinâs image as being a legitimate asset among the public.
đ§ What Should You Do: Stack Bitcoin or Buy an ETF?
With this new option on the table, many people will start wondering if they should buy bitcoin or buy a bitcoin ETF. We put together this handy flowchart to ask the right questions for this decision.
The biggest decision-maker for many investors will be the fees for HODLing: the spot Bitcoin ETFs have an annual fee that investors indirectly pay called the expense ratio, which is typically around 0.20-0.30% for the most competitively priced ETFs. For the long-term holders, this seemingly small expense can compound big time, which lowers the total returns of the investment.
Scenario:
We used this fund calculator to play out a scenario. Letâs say an investor puts $100,000 into a Bitcoin ETF with a 0.20% expense ratio.
Assuming the bitcoin price stays the same, the compounded fee over 10 years amounts to approximately $2,000. This is significantly higher than a one-time fee on a direct bitcoin investment of the same amount, which is usually 1% or $1,000.
However, if as an example we assume a 10% annual growth rate of Bitcoin on average over 10 years, the total expense of an ETF investment amounts to over $4,600! And for 20 years, it's over $24,000!
This illustrates how ongoing expense ratios, even at seemingly low percentages, can accumulate to a substantial amount over the long term for investors.
For detailed insights into Bitcoin ETFs, you can check it out here.
đĄ Take an Insider Look At Riverâs 2023 Journey
2023 was Riverâs best year yet, but this success wasnât built overnight. Our COO Julia Duzon reflects on our key milestones and lessons from 2023, and how we think about Riverâs operating system.
If you have a business or if youâre curious about how things work internally here, this is an excellent look behind the scenes.
The Team Behind River