Should You Buy Bitcoin Directly or a Bitcoin ETF Like BlackRock’s IBIT

By Alex Assoune Oct 28, 2025

Whether you should buy Bitcoin (BTC) directly or BlackRock’s iShares Bitcoin ETF (IBIT) depends on your goals, comfort level, and how you want to hold your investment. Let’s break it down clearly 👇

⚡️ 1. What You’re Actually Buying

Option	What You Own	How It Works
Bitcoin (BTC)	The actual cryptocurrency stored in a wallet (your coins).	You buy BTC on an exchange or peer-to-peer, and you hold it yourself — ideally in a secure wallet.
IBIT (BlackRock ETF)	Shares that represent Bitcoin owned by BlackRock’s fund.	You buy IBIT just like a stock in a brokerage account (Fidelity, Robinhood, etc.), and BlackRock holds the Bitcoin for you.

💡 2. Pros & Cons of Each

✅ Bitcoin (Direct Ownership)

Pros:

You truly own the Bitcoin — not a paper claim.
You can move it, send it, or use it as payment.
No management fees.
Better long-term privacy and independence from financial institutions.

Cons:

You must manage security (wallets, private keys, backups).
If you lose your private keys, your Bitcoin is gone.
Harder for tax tracking and traditional portfolio integration.

✅ IBIT (ETF)

Pros:

Super easy to buy, hold, and sell — just like a stock.
No wallets or crypto exchanges needed.
BlackRock handles custody, security, and compliance.
Suitable for retirement accounts (IRA, 401k).
Safer for beginners or traditional investors.

Cons:

You don’t actually own Bitcoin — just exposure to its price.
You can’t transfer or spend it.
There’s a small annual management fee (around 0.25%).
You depend on BlackRock’s custodian, not self-custody.

📊 3. Who Each Option Fits Best

Type of Investor	Better Option	Why
Crypto believer / tech-savvy	Bitcoin (BTC)	You value true ownership, decentralization, and control.
Traditional investor / retirement saver	IBIT	You want exposure to Bitcoin’s price with simplicity, regulated structure, and easy tax handling.
New to crypto	IBIT (to start)	Safer entry point — you can always move to direct Bitcoin later once you learn about wallets.
Trader or speculator	Either, depending on convenience and fees.

💬 4. My Balanced View

If you’re long-term bullish on Bitcoin but new to crypto:

Start with IBIT — it’s simple, secure, and regulated.
Once you’re comfortable and want full control, learn to self-custody and buy Bitcoin directly.

That way, you can ease in while still benefiting from price growth.

Here’s a rough comparison / hypothetical projection of investing in Bitcoin (BTC) vs IBIT (the iShares Bitcoin Trust ETF) over (say) 5 years, showing how fees, compounding, and difference in structure could affect your returns. Use this as a guide — real outcomes depend heavily on market performance, timing, taxes, etc.

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Stock market information for Bitcoin (BTC)

Bitcoin is a crypto in the CRYPTO market.
The price is 122605.0 USD currently with a change of -241.00 USD (-0.00%) from the previous close.
The intraday high is 123188.0 USD and the intraday low is 120701.0 USD.

Stock market information for iShares Bitcoin Trust ETF (IBIT)

iShares Bitcoin Trust ETF is a fund in the USA market.
The price is 69.54 USD currently with a change of 0.41 USD (0.01%) from the previous close.
The latest open price was 69.59 USD and the intraday volume is 17738012.
The intraday high is 70.05 USD and the intraday low is 69.04 USD.
The latest trade time is Wednesday, October 8, 16:37:00 +0200.

Key Inputs & Assumptions

To build the projection, we need to assume or approximate:

Parameter	Bitcoin (BTC)	IBIT ETF
Underlying performance	i.e. BTC price growth (same baseline)	Same — ETF aims to track Bitcoin’s price
Annual fee / expense	0% (you just hold BTC; but you may incur exchange/trading fees, wallet fees, etc.)	0.25% per year (management / sponsor fee) (BlackRock)
Fee waivers / discounts	—	For the first year, BlackRock waives a portion of the fee (for first $5B of assets) so effective fee might be ~0.12% for that portion. (BlackRock)
Other costs / slippage	Trading fees, spreads, wallet & custody risks, possible losses if keys lost	ETF bid-ask spreads, brokerage commissions, premium/discount vs NAV, tax treatments
Return assumption	Let’s assume Bitcoin grows at an average of, say, 20% per year (this is purely illustrative)	The ETF mirrors that growth minus the fee drag (0.25%)

Hypothetical Projection: $10,000 Invested, 5 Years

Let’s use a simple model:

BTC grows 20% per year (compounded).
IBIT grows 20% minus 0.25% (i.e. net ~19.75% per year) — and in Year 1 maybe a small discount due to the fee waiver.
Ignore taxes for this comparison (just gross returns).

Year	BTC Value	IBIT Value
Start	$10,000	$10,000
Year 1	10,000 × 1.20 = $12,000	10,000 × (1 + 0.20 – fee) ≈ 10,000 × 1.1975 = $11,975 (or maybe a little better due to waiver)
Year 2	12,000 × 1.20 = $14,400	11,975 × 1.1975 = $14,342
Year 3	14,400 × 1.20 = $17,280	14,342 × 1.1975 = $17,186
Year 4	17,280 × 1.20 = $20,736	17,186 × 1.1975 = $20,589
Year 5	20,736 × 1.20 = $24,883	20,589 × 1.1975 = $24,582

After 5 years, the difference is $24,883 (BTC) vs $24,582 (IBIT) — BTC beats by ~ $301 in this scenario (i.e. about 1.2% relative difference over 5 years).
The drag of the ETF fee compounds, so over longer horizons the gap widens.

This is a simplified model. Real returns could diverge more, or even less, depending on fee changes, premium/discount effects, and real BTC volatility.

Qualitative Factors That Change the Equation

Security / Custody Cost & Risk
- Holding BTC directly means you’re responsible for securing wallets, private keys, backups, possibly hardware wallets, etc. Mismanaging this can lead to total loss.
- With IBIT, BlackRock (via custodian) handles security and custody — less work/risk for you (though you now trust the custodian).
Liquidity & Simplicity
- Buying and selling IBIT is as easy as a stock — in your brokerage account.
- Selling BTC directly might involve exchange fees, slippage, withdrawal delays.
Tax Differences
- The tax treatment of direct BTC vs ETF shares can differ based on jurisdiction (capital gains, “securities” taxation, etc.).
- The ETF structure may offer advantages or disadvantages in your country.
Premium / Discount to NAV, Tracking Errors
- IBIT might trade at a small premium or discount relative to its underlying Bitcoin value (NAV).
- There could be slight discrepancies or costs in “rebalancing” the fund that slightly erode performance.
Fee Changes Over Time
- BlackRock could change the management fee (increase or lower), though that’s regulated and public.
- Direct BTC holders have more “fixed” costs (wallet, exchange) but those can also change.

Conclusion & My Take

Over moderate horizons (5 years in this scenario), the difference in net return between BTC direct vs IBIT (with ~0.25% fee) is not massive under “normal” growth assumptions.
But the small drag from fees, when compounded, will gradually widen the gap in favor of direct BTC.
That said, the non-return factors (security, convenience, tax, liquidity) often become the bigger deciding factor for many investors.

If you're comfortable with crypto custody, security, and willing to take on that responsibility, holding BTC directly usually offers slightly higher upside (since no management fees).
But if you value ease, regulatory oversight, and minimal hassle, IBIT is a very decent alternative, especially for many investors who just want exposure without the crypto “plumbing.”

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About the Author: Alex Assoune

Alex Assoune (MS) is a global health and environmental advocate. He founded Panaprium to inspire others with conscious living, ethical, and sustainable fashion. Alex has worked in many countries to address social and environmental issues. He speaks three languages and holds two Master of Science degrees in Engineering from SIGMA and IFPEN schools.

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