Will spot Bitcoin ETFs be cheaper than crypto exchanges to buy BTC?
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Bloomberg analyst Eric Balchunas has speculated whether crypto exchanges would be forced to reconsider their pricing structures if the spot Bitcoin ETF is approved, given the low fees charged by some of the leading players.
But regarding issuers offering lower fees, Caitlin Long of digital asset custody platform Custodia Bank expressed concern that low ETF fees could indicate issues with issuers covering costs. While Custodia appears to be a direct competitor, Long warned that ETF issuers that offer fees that aren’t high enough to cover their costs may resort to securities lending to offset losses.
Bitcoin in escrow will not be lent out as such, but will instead be kept in cold storage, according to the ETF applicants’ filed prospectus. However, it is possible to lend ETF shares with collateral supporting the transaction.
We analyzed some of the best crypto exchanges to compare how low these fees are. The chart below shows trading fees on some of the most popular crypto platforms for traders placing market orders without promotional benefits such as staking, native token holding, or high trading volume.
The chart below shows the cost of holding Bitcoin equivalents for 1 year among the proposed Bitcoin ETFs currently awaiting approval.
It is worth noting that to purchase any shares in the Bitcoin ETFs above, users must use a broker to make the purchase. Some brokers charge fees for custodial shares, while others charge no fees at all. For example, exchanges such as Webull, eToro, and Robinhood offer zero-commission trading. In contrast, others such as Hargreaves Lansdown, BestInvest, Interactive Investor and ig.com charge a flat fee for US ETF purchases, while some offer zero after commission for a certain number of fees.
This analysis will assume zero commission trading for the proposed spot Bitcoin ETFs.
Taking this into account, it appears that crypto.com is the cheapest exchange to buy Bitcoin; When held for 1 year, it comes to just $1.50 for a $2,000 purchase compared to the lowest ETF fee of $4.80.
However, many of the above crypto exchanges also charge withdrawal fees. As of press time, Crypto.com has a withdrawal fee of 0.0006 BTC, which is $27. The current average network fee on Bitcoin is 0.0002 ($9.45). Other exchanges like binance only charge network withdrawal fees.
The chart below shows the cost of purchasing and withdrawing a relevant amount of Bitcoin to self-custody, using the average transaction fee as of the news publication date.
But there is a critical difference between buying Bitcoin through an ETF or exchange. With a spot Bitcoin ETF, you gain exposure to the underlying Bitcoin held for you through the issuer and its Bitcoin custodian (Coinbase Custody in most cases). However, you can only do this when you exit the ETF. in cash, not Bitcoin. Bitcoin is held in custody in your name only for as long as you own ETF shares.
With a crypto exchange, you buy Bitcoin, which is also under the custody of a third party. However, you can then withdraw Bitcoin directly to your own custodial wallet or convert it to FIAT and withdraw it as cash. However, the custody difference is potentially significant. If spot Bitcoin ETFs are approved, they would be subject to much closer and more direct regulatory scrutiny than many crypto exchanges. The FTX debacle in 2022 highlighted how important knowing where your crypto is stored can be.
Therefore, as of the moment of publication, among the services reviewed, Binance is the cheapest exchange to buy and take care of Bitcoin. Bitwise is the cheapest ETF to buy and hold Bitcoin with custody through an exchange-traded product, and crypto.com is the cheapest crypto exchange to buy and hold Bitcoin with no withdrawal.
The best providers to buy Bitcoin and store it on your behalf are crypto.com, Binance, Bitwise, and Ark/VanEck.
It is also important to note that this analysis is based on a single purchase made using an account with no special privileges or volume bonuses. Many exchanges offer discounts on fees for active investors, reducing the cost of buying and holding Bitcoin.
#spot #Bitcoin #ETFs #cheaper #crypto #exchanges #buy #BTC
bitcoin
-buy-.jpg” />
Bloomberg analyst Eric Balchunas has speculated whether crypto exchanges would be forced to reconsider their pricing structures if the spot Bitcoin ETF is approved, given the low fees charged by some of the leading players.
But regarding issuers offering lower fees, Caitlin Long of digital asset custody platform Custodia Bank expressed concern that low ETF fees could indicate issues with issuers covering costs. While Custodia appears to be a direct competitor, Long warned that ETF issuers that offer fees that aren’t high enough to cover their costs may resort to securities lending to offset losses.
Bitcoin in escrow will not be lent out as such, but will instead be kept in cold storage, according to the ETF applicants’ filed prospectus. However, it is possible to lend ETF shares with collateral supporting the transaction.
We analyzed some of the best crypto exchanges to compare how low these fees are. The chart below shows trading fees on some of the most popular crypto platforms for traders placing market orders without promotional benefits such as staking, native token holding, or high trading volume.
| Changing | trading fees | $100 | $200 dollars | $2000 |
|---|---|---|---|---|
| Kraken | 0.26% | $0.26 | $0.52 | $5.20 |
| Coinbase | 0.60% | $0.60 | $1.20 | $12.00 |
| Crypto.com | 0.075% | $0.075 | $0.15 | $1.50 |
| Gemini | $0.99, 1.49% for >$199 | $0.99 | $2.98 | $29.80 |
| CashApp | 3%, 1.75% for >$199, 1.25% for >$1999 | $3.00 | $3.50 | $25.00 |
| Binance | 0.1% | $0.10 | $0.20 | $2.00 |
The chart below shows the cost of holding Bitcoin equivalents for 1 year among the proposed Bitcoin ETFs currently awaiting approval.
| ETF issuer | Fees (bps) | $100 | $200 dollars | $2000 |
|---|---|---|---|---|
| Invesco/Galaxy | 59 basis points | $0.59 | $1.18 | $11.80 |
| Black Rock | 30bps | $0.30 | $0.60 | $6.00 |
| Bitsel | 24 basis points | $0.24 | $0.48 | $4.80 |
| Boat | 25bps | $0.25 | $0.50 | $5.00 |
| Loyalty | 39 basis points | $0.39 | $0.78 | $7.80 |
| Valkyrie | 80bps | $0.80 | $1.60 | $16.00 |
| grayscale | 150bps | $1.50 | $3.00 | $30.00 |
| Tree of Wisdom | 50bps | $0.50 | $1.00 | $10.00 |
| VanEck | 25bps | $0.25 | $0.50 | $5.00 |
It is worth noting that to purchase any shares in the Bitcoin ETFs above, users must use a broker to make the purchase. Some brokers charge fees for custodial shares, while others charge no fees at all. For example, exchanges such as Webull, eToro, and Robinhood offer zero-commission trading. In contrast, others such as Hargreaves Lansdown, BestInvest, Interactive Investor and ig.com charge a flat fee for US ETF purchases, while some offer zero after commission for a certain number of fees.
This analysis will assume zero commission trading for the proposed spot Bitcoin ETFs.
Taking this into account, it appears that crypto.com is the cheapest exchange to buy Bitcoin; When held for 1 year, it comes to just $1.50 for a $2,000 purchase compared to the lowest ETF fee of $4.80.
However, many of the above crypto exchanges also charge withdrawal fees. As of press time, Crypto.com has a withdrawal fee of 0.0006 BTC, which is $27. The current average network fee on Bitcoin is 0.0002 ($9.45). Other exchanges like binance only charge network withdrawal fees.
The chart below shows the cost of purchasing and withdrawing a relevant amount of Bitcoin to self-custody, using the average transaction fee as of the news publication date.
| Changing | trading fees | $100 | $200 dollars | $2000 | Withdrawal Fees |
|---|---|---|---|---|---|
| kraken | 0.26% | $18.26 | $18.52 | $23.20 | $18 |
| coinbase | 0.60% | $10.45 | $10.65 | $21.45 | network fee |
| Crypto.com | 0.075% | $27.07 | $27.15 | $28.50 | $27 |
| gemini | $0.99 or 1.49% for >$200 | $10.44 | $12.43 | $39.30 | network fee |
| CashApp | 3% or 1.75% for >$200 or 1.25% for >$1999 | $12.45 | $12.95 | $34.45 | network fee |
| Binance | 0.1% | $9.55 | $9.75 | $9.75 | network fee |
But there is a critical difference between buying Bitcoin through an ETF or exchange. With a spot Bitcoin ETF, you gain exposure to the underlying Bitcoin held for you through the issuer and its Bitcoin custodian (Coinbase Custody in most cases). However, you can only do this when you exit the ETF. in cash, not Bitcoin. Bitcoin is held in custody in your name only for as long as you own ETF shares.
With a crypto exchange, you buy Bitcoin, which is also under the custody of a third party. However, you can then withdraw Bitcoin directly to your own custodial wallet or convert it to FIAT and withdraw it as cash. However, the custody difference is potentially significant. If spot Bitcoin ETFs are approved, they would be subject to much closer and more direct regulatory scrutiny than many crypto exchanges. The FTX debacle in 2022 highlighted how important knowing where your crypto is stored can be.
Therefore, as of the moment of publication, among the services reviewed, Binance is the cheapest exchange to buy and take care of Bitcoin. Bitwise is the cheapest ETF to buy and hold Bitcoin with custody through an exchange-traded product, and crypto.com is the cheapest crypto exchange to buy and hold Bitcoin with no withdrawal.
The best providers to buy Bitcoin and store it on your behalf are crypto.com, Binance, Bitwise, and Ark/VanEck.
It is also important to note that this analysis is based on a single purchase made using an account with no special privileges or volume bonuses. Many exchanges offer discounts on fees for active investors, reducing the cost of buying and holding Bitcoin.
#spot #Bitcoin #ETFs #cheaper #crypto #exchanges #buy #BTC
