March 11, 2024 Cryptocurrency

The Advantages of Bitcoin Over Bitcoin ETFs

Why WeStreet Credit Union Members Might Consider Holding Actual Crypto

In the world of digital currencies, Bitcoin has captured significant attention and popularity. More recently, Bitcoin exchange-traded funds (ETFs) have emerged as a potential investment option. However, Members of WeStreet Credit Union should be aware of the distinct differences between direct investment in Bitcoin versus Bitcoin ETFs. In this article, we will explore why holding actual Bitcoins through WeStreet Credit Union may provide unique benefits compared to Bitcoin ETFs.

  1. Direct Ownership and Control:
    Investing in Bitcoin through WeStreet Credit Union allows Members to have direct ownership and control over their assets. Bitcoins are held in personal wallets, ensuring complete control and security over their investments. In contrast, Bitcoin ETFs function as financial instruments where investors do not possess actual Bitcoins but instead hold shares in the ETF. This lack of direct ownership undermines the fundamental principle of ownership and control.
  2. Absence of Management Fees:
    One significant advantage of directly investing in Bitcoins is the absence of management fees. WeStreet Credit Union Members who hold actual Bitcoins avoid the fees associated with managing and administering investment funds, which can eat into potential returns, especially over the long term. By avoiding management fees, Members have the opportunity to enhance their overall returns.
  3. Tax Efficiency:
    Investing directly in Bitcoins might offer tax advantages compared to Bitcoin ETFs. Selling Bitcoins as capital assets may qualify for long-term capital gains tax rates, which can be lower than ordinary income tax rates. However, Bitcoin ETFs are subject to the same taxation rules as any other ETF or investment fund. WeStreet Credit Union Members should consult with a tax professional to understand the tax implications before making investment decisions.
  4. No Counterparty Risk:
    By holding actual Bitcoins, WeStreet Credit Union Members can avoid the
    counterparty risk associated with Bitcoin ETFs. Bitcoin ETFs are issued and backed by financial institutions or asset managers, exposing investors to potential risks if these institutions face financial troubles or fail to fulfill their obligations. In contrast, holding Bitcoins in personal wallets removes the credit risk tied to counterparties.
  5. Potential for Higher Returns:
    Investing directly in Bitcoins presents the potential for higher returns compared to Bitcoin ETFs. Bitcoin’s price performance is directly influenced by market demand and supply dynamics. WeStreet Credit Union Members who hold actual Bitcoins have the opportunity to benefit directly from positive price movements. Bitcoin ETFs, on the other hand, are more influenced by broader market sentiment and the performance of the ETF itself. While Bitcoin ETFs may offer convenience and exposure to the Bitcoin market, WeStreet Credit Union Members might consider the distinct advantages of holding actual Bitcoins. These advantages include direct ownership and control, the absence of management fees, tax efficiency, the avoidance of counterparty risk, and the potential for higher returns.

Before deciding between Bitcoins and Bitcoin ETFs, WeStreet Credit Union Members should carefully assess their risk tolerance and investment goals. By leveraging the unique benefits of holding actual Bitcoins, Members can maximize their investment potential in the dynamic world of digital currencies.

This information is for educational purposes only, is believed to be accurate at the time of publication, and should not be construed as investment adviceDigital assets (i.e. cryptocurrencies) held in your digital asset account (i.e. crypto account) are not federally insured by any government entities, including, but not limited to, NCUA. The digital assets offered may be heavily speculative and volatile; involve investment risk; may have associated fees; may not allow member recourse; and are being offered by a third party. Your digital account does not support wallet-to-wallet transferring of your digital assets (i.e. cryptocurrencies). You should carefully consider whether buying or holding digital assets is suitable for you in light of your financial condition. Digital assets are not obligations of WeStreet and are not guaranteed by WeStreet. For additional terms and conditions governing your digital asset account, please refer to our Crypto Terms and Conditions.