Fidelity Wise Origin Bitcoin Fund ETF: My Preferred Choice For BTC Investment

Summary The US Securities and Exchange Commission has approved spot Bitcoin ETFs, marking an important milestone for Bitcoin as an investable asset. The Fidelity Wise Origin Bitcoin Fund is my preferred choice due to its competitive fees and Fidelity's trustworthiness as a pro-Bitcoin financial entity. Developer funding from ETF fees has become a polarizing element, raising concerns about potential influence on Bitcoin's core development. This is not a risk with FBTC. More than ten years after the first Bitcoin ( BTC-USD ) ETF application by the Winklevoss twins, the US market finally has an approved spot ETF. What's better than one spot ETF? How about eleven? After losing its court battle with Grayscale last year, Gary Gensler's SEC approving a spot ETF became increasingly more likely as 2023 came to a close. In a largely telegraphed and at times embarrassing spectacle , the agency approved ten new spot Bitcoin ETFs and the conversion of the Grayscale Bitcoin Trust ETF ( GBTC ) simultaneously. In my view, this an important milestone for Bitcoin as an investable asset and I've detailed my general thoughts on what it means for price and for the network here . With nearly a dozen spot ETF choices, the question now becomes which fund should investors buy? In this article, I'll highlight the reasons why I've personally chosen the Fidelity Wise Origin Bitcoin Fund ( FBTC ) over the other options. Of Course, The Fees Likely the most straightforward consideration when choosing one of these funds is the annual fee. Given Bitcoin is a fungible digital asset, there is no real difference between the BTC held in these funds fundamentally. Since these are single-asset ETFs, the fund fees are the first thing investors should look at. We've seen almost every ETF offer an introductory fee waiver that lasts somewhere between 3 and 12 months with the most common offer being 6 months or up to $1 billion in AUM: Institution ETF Ticker Current Fee Fee After Waiver Waiver BlackRock ( IBIT ) 0.12% 0.25% 12mo or $5b Invesco Galaxy ( BTCO ) 0.00% 0.39% 6mo or $1b Franklin Templeton ( EZBC ) 0.29% 0.29% N/A Fidelity FBTC 0.00% 0.25% Until 7/31/24 WisdomTree ( BTCW ) 0.00% 0.30% 6mo or $1b VanEck ( HODL ) 0.25% 0.25% N/A Grayscale GBTC 1.50% 1.50% N/A ARK 21Shares ( ARKB ) 0.00% 0.21% 6mo or $1b Bitwise ( BITB ) 0.00% 0.20% 6mo or $1b Valkyrie ( BRRR ) 0.00% 0.49% 3mo Hashdex ( DEFI ) 0.90% 0.90% N/A Source: Into The Block, as of 1/22/24 Thinking purely about the fee, FBTC is highly competitive at just 0.25% after the fee waiver expires at the end of July. Admittedly, FBTC isn't actually the lowest fee when these waivers do ultimately all expire. That crown goes to Bitwise's offering. However, fees are just one part of this. Trust In TradFi There are traditional financial firms that have clearly been pro-crypto for quite some time. Fidelity is one of these firms. Sharing a brief personal anecdote; I have two different IRAs where I hold most of my retirement investment capital. Though they are functionally similar products, these IRAs are held with different companies. I was not allowed to purchase any of the Grayscale funds in my Wells Fargo ( WFC ) IRA when I wanted to several years ago. This limited my potential upside as an individual investor with a self-directed retirement account and so far the proof has been in the pudding. My other IRA is with Fidelity. It is here where I've been able to trade Grayscale funds and enjoy the returns that have come from those purchases. It may be a small thing, but for me it does give Fidelity a certain level of gravitas as a more pro-Bitcoin financial entity. Given this, it's no surprise to me that Fidelity is one of the only ETFs that isn't utilizing Coinbase ( COIN ) for asset custody. Bitcoin ETF Comparison (IntoTheBlock) I view this as positive for Fidelity compared to the other ETFs. While I have almost no concern about Coinbase from a blockchain competency standpoint, using Coinbase for custody does add an additional element of potential risk simply by nature of it being a third party. Again, I don't view this as a significant risk, but I do think it gives Fidelity a long term edge since custody is being done in-house through a subsidiary business. Even though fees have become a bit of a race to the bottom for these ETFs, at a certain point that added layer for these other ETFs may ultimately require a larger cost to the investor. In my last Coinbase article for Seeking Alpha, I hypothesized that the company's trading volumes will likely lose market share to decentralized exchanges and cross-chain protocols like THORChain ( RUNE-USD ) over the next several years. For Coinbase, that means priority may shift to monetizing on-chain activity through its Ethereum ( ETH-USD ) scaling layer Base or charging its institutional customers more for its custody services. If Coinbase goes with the latter option, it could mean we see higher fees from the Bitcoin ETFs that utilize Coinbase for custody. This would not impact Fidelity and would theoretically allow FBTC to remain cheaper by comparison. But again, this is purely speculation and is likely several years away if it happens at all. Development Funding Another interesting angle that has emerged since these spot ETFs were approved is the developer funding news. Bitwise and VanEck have both publicly committed to funding Bitcoin's core developers with percentages of the ETF fees for several years. This is an interesting marketing tool for these fund managers to drive AUM, but it has also become a slightly polarizing element of the ETF story for some Bitcoiners. Bitcoin Development (Santiment) Bitcoin's core development trend has historically been strong. In the chart above, I'm showing code commits and active developers for the network. Each metric has generally been in decline since 2021. It's important to note that these developers are usually supported through various funding sources that include Blockstream, Lightning Labs, Bitmain, and various other entities. The concern if development funding starts coming from traditional financial institutions would be that funding can also come with an expectation of influence. To be clear, there is no indication that this funding is anything other than a no-strings-attached donation. But these are the types of things to consider if you view yourself as a Bitcoin purist who still wants to buy some in a tax-advantaged account. TradFi firms funding core development many not lead to the kind of outcomes some Bitcoiners would want for the network. Summary I think spot Bitcoin ETFs are a really good thing for the price of BTC long term. In my view, Bitcoin now undeniably has a seat the table in traditional finance and there are numerous world governments that currently hold BTC including the United States. US investors have cheap and easy access to BTC as a capital appreciation idea. While it's certainly fair to point out that this was never the intention for the asset, like or it not, this is where BTC is in 2024. I still maintain that BTC in self-custody is the best way to own it if you can own enough of it to justify the fee from using it. For others, these ETFs may be the best way to get exposure. In addition to my personal BTC stack, I have purchased FBTC in my IRAs and I plan to hold it for a long time.