Highlights 

1. IBIT is physically backed by Bitcoin, ensuring secure and direct exposure to Bitcoin’s value.
2. FBTC uses Fidelity’s self-custody, offering lower costs and institutional-grade security.
3. IBIT has proven liquidity and a long track record, making it a stable option for investors.
4. FBTC’s temporary 0% fee makes it affordable, but it has less historical data and lower liquidity.
5. Both ETFs mirror Bitcoin’s volatility; IBIT suits stability seekers, while FBTC appeals to cost-conscious investors.

As Bitcoin’s price jumps up and down, many people are looking for ways to invest without the hassle of owning and storing it directly.

That’s where Bitcoin ETFs step in. These funds let you invest in Bitcoin through a regular brokerage account, making it much easier than buying and managing individual coins. Two top Bitcoin ETFs are the iShares Bitcoin ETF (IBIT) and Fidelity Wise Origin Bitcoin Fund (BATS: FBTC). While both follow Bitcoin’s performance, they have key differences.

In this article, we’ll break down the difference between FBTC vs IBIT and why IBIT often comes out on top. But first, let’s take a closer look at both ETFs.

What Is IBIT?

IBIT is a Bitcoin ETF that lets you invest in Bitcoin without buying it directly. Unlike some other Bitcoin ETFs, IBIT doesn’t use futures contracts. Instead, it’s physically backed, holding real Bitcoin reserves equal to the number of ETF shares issued.

When you buy a share of IBIT, you buy a piece of its Bitcoin holdings. IBIT works with a trusted custodian to securely store these reserves, ensuring the Bitcoin is protected. This setup makes IBIT a safer and more easy way to invest in Bitcoin without dealing with the complexities of owning it yourself.

What Is FBTC?

FBTC is another Bitcoin ETF, but it stands out because it uses Fidelity’s secure storage system instead of a third-party custodian. This self-custody approach reduces costs and simplifies the process, making it a unique option in the ETF market.

By managing its own Bitcoin reserves, Fidelity ensures that institutional-grade security measures are in place. This means investors can trust Fidelity to store and manage Bitcoin efficiently and securely.

While FBTC is newer and has less historical data, its innovative self-custody system sets it apart from competitors like IBIT.

IBIT vs FBTC: Which Fund is Best for You?

When investing in Bitcoin ETFs, both IBIT and FBTC expose you to Bitcoin. But there are some important differences you should know about.

1. Fees

Comparing fees is a key step in choosing between IBIT and FBTC. Both have low costs compared to traditional investments, but there’s a notable difference:

• IBIT charges a 0.25% expense ratio.
• FBTC currently has a 0% fee, but this is temporary. Once the introductory period ends, FBTC is expected to charge a fee similar to IBIT’s 0.25%.

Keep in mind that FBTC’s fee advantage won’t last forever.

2. Risks

Both ETFs are tied to Bitcoin prices, so their risks mirror Bitcoin’s volatility. If you’ve researched Bitcoin, you know it’s more unpredictable than the stock market.

• Neither IBIT nor FBTC is significantly riskier than Bitcoin itself.
• FBTC might experience higher short-term volatility because it’s newer. Over time, its price swings are expected to align with IBIT’s.

3. Historical Performance

Since IBIT and FBTC track Bitcoin, their performance is nearly identical. However, their track records differ:

• IBIT has been around longer, giving it a proven history investors can review.
• FBTC is new, so its reliability over time is still uncertain.

Some investors prefer IBIT for its established reputation, which can be a safe choice if you want more certainty.

4. Liquidity

Liquidity is how easy it is to buy or sell an ETF’s shares without causing big price changes. The more trading activity an ETF has, the easier it is to trade.

• IBIT stands out here because it has been around longer and has more active investors. This makes it easier to enter or exit trades quickly without affecting the price.
• FBTC, on the other hand, currently has much lower liquidity. One reason it’s offering a 0% fee for a limited time is to attract more investors and boost trading activity.

If you need faster, smoother trades, IBIT is the best option. While FBTC’s liquidity might improve as its investor base grows, IBIT remains the more reliable choice for seamless trading today.

IBIT vs FBTC: Which ETF Should You Buy?

Both IBIT and FBTC offer a way to invest in Bitcoin without directly buying it. Deciding which is right for you comes down to your comfort with risk.

• IBIT has a long history, a trusted custodian, and a potentially lower risk. It’s a solid choice for investors who prefer a proven option. Many already trust IBIT for its reliability.
• FBTC, on the other hand, is new and has no fees for now, making it a more affordable option in the short term. However, its lack of a track record adds some risk.

If you’re looking for a Bitcoin IRA company that could help you open a crypto IRA account, contact us! 

Interested in Diversification?

Looking beyond Bitcoin? Precious metals and real estate investments are excellent options to balance your portfolio with tangible assets.

FBTC or BITB: Which One Is Better?

Choosing between FBTC (Fallback Transaction Bitcoin) and BITB (BitBean, also known as Bean Cash) depends on your specific use case and investment goals. Here’s a brief comparison to help you decide:

FBTC (Fallback Transaction Bitcoin)

• Purpose: Typically used as a pegged Bitcoin variant or in fallback scenarios, depending on implementation. It might have links to wrapped or derivative Bitcoin solutions.
• Stability: If pegged, it closely follows Bitcoin’s price and volatility.
• Adoption: Benefits from Bitcoin’s vast network effects and ecosystem.
• Use Case: Often employed in technical blockchain scenarios or as an auxiliary in specific financial solutions.

BITB (BitBean/Bean Cash)

• Purpose: A digital currency emphasizing speed, efficiency, and low transaction fees. It was rebranded to Bean Cash and promoted its “Proof of Bean” consensus mechanism.
• Stability: Typically less stable due to lower adoption and smaller market capitalization.
• Adoption: Niche community and less mainstream than Bitcoin variants.
• Use Case: Ideal for microtransactions or low-cost financial exchanges.

Summary

When comparing FBTC vs IBIT, your choice depends on your priorities as an investor. IBIT offers stability, a trusted custodian, and strong liquidity, making it ideal for those seeking a proven, reliable option. On the other hand, FBTC’s innovative self-custody system and temporary 0% fee provide a cost-effective entry point, albeit with less historical performance and liquidity.