Topic: Just bought FBTC in my 401k. First time ever holding crypto for retirement. (Read 448 times)

So, people who buy Bitcoin through an ETF get additional financial benefits and profit apart from the rising value of Bitcoin? I didn't know this, I guess I need to do some reading about ETFs, investments and their pros and cons, etc.

Anyway, just like any other Bitcoin user from the past, I'm not a fan of buying Bitcoin or any cryptocurrency through a third-party that would have possession of my assets instead of myself. I know that most of us use third-party exchange platforms to make purchases, but they give us complete freedom to withdraw and keep our assets with ourselves in our private wallets. There is no fun and meaning in having Bitcoin if you don't have the freedom to hide it from the world and don't let anyone know how much you have and where and how you spend it.

but holding a share does not mean you own a bitcoin managed by someone else.. you do not own bitcoin by holding shares. you just have beneficial interest in the market price exposure of the index the ETF chooses and the pegging amount the ETF chooses..

There are probably other people who rather trust companies than themselves. I understand them especially those who are already too old to get into the rabbit hole of technicalities. Of course I prefer to own and keep real Bitcoins myself, but to those who can't handle the heavy responsibilities that it implies, a Bitcoin spot ETF offered by a trusted and popular financial institution is an option. There's still risk of course but others might feel that keeping it personally is riskier.

i can tell you have not even read fidelity's s-1/a filing with the SEC..
there are too many corrections i would have to make to clarify where you have things mixed up, that its probably best you go read the s-1/a to realise that you as a share holder through a broker are several levels away from having any ownership claim of bitcoin. your shares are just measured on the performance of the bitcoin market index.. (you have exposure to spot price but not ownership claim of btc)

if not interested in reading the whole of it. and just want to learn some risks .. use browsers [find in page] function for "sole discretion" and see all the points where all the levels above you can do things without share holders permission/vote/knowledge or notice.. its enlightening

https://www.sec.gov/Archives/edgar/data/1852317/000119312524003839/d375081ds1a.htm#rom375081_4
by the way its really worth learning what a trust is. its where there is no ownership. just a hierarchy of management and beneficiaries whom dont own the property inside the trust but can get beneficial benefit of the trust structure without ownership

ill just add this lil snippet

and

With an ETF shareholders, admittedly only the larger ones, have a right to redemption meaning they can request delivery of the underlying asset. To simplify the Bitcoin ETF's it is a cash only redemption meaning you would get the spot market price of Bitcoin not physical Bitcoin but effectively it's the same thing. So with an ETF in a very real sense the shareholders are owners of the underlying asset and the fund manger, in this case Fidelity, is just a custodian. It's not as good as holding Bitcoin in your own wallet but has the advantage that you can get access to it through an IRA or 401k with a linked brokerage account.

In the scope of a 401K: My employer matches my 401K contributions 100%, tax free money at this point. Additionally the 401K lowers my real tax exposure. When I retire I can draw that money at a much reduces tax exposure. Additionally I can rebalance within my 401k with ease and no tax.

Outside the scope of 401K: It fit's nicely inside a one screen portfolio. Again I can rebalance inside without a tax event.

Corporate: It's far more palatable to own ETF. Having custody of a private key within a company even with ulti sig is frightening. Imagine the temptation of a controller holding the 12 words to millions of dollars. Think vanish to El Salvador.

In conclusion: It's never all or nothing. Hold some in your 401k, hold some in your portfolio and hold some in your  cold wallet. Holding it all in one place is FOOLISH. Hold a couple cold wallets of different architectures in different places. And the biggest thing of all keep your mouth shut.

 

I understand investing in Bitcoin directly, which isn't hard and is quite promising in the long run. I also get that some traditional investors who are used to dealing through big funds can find Bitcoin ETFs attractive. But can the op explain the benefits of buying FBTC? How is Fidelity's ETF more attractive than Bitcoin itself? Is it expected to somehow be more profitable? Do they offer interest rates or something like that? I just honestly don't get why one would put money into a big company's hands if one is comfortable investing into Bitcoin directly.

They don't want to, not because they are busy and lazy but as the OP said, they trust the company more than himself. I think ETF's aren't the only one that offers this but there might be others before, however this ETF might be more known and safer than them.

Growing together with the company seems cool and it gives us a good feeling but the only problem is, if the company collapses, our BTC's or invested amounts are also going to be in danger. This is the risk of doing it. Retirement plans like that were most of the times offered by the company we are working with, but if you are self-employed and you are still struggling financially, you may want to less prioritize them for a while.

blackrock use coinbase as custodian.. so not even blackrock hold their own keys
if you look back to the days coinbase held the keys for grayscale. coinbase announced it does not even tell grayscale of the whole custodian process as its "commercially sensitive"

people have also used chain analysis to find the addresses of coinbases custody, and found the funds resided on legacy addresses (one privkey per address) and not even using things like multiparty secured addresses (multisig)

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as for instances where coinbase lose funds due to hacking/insider syphoning/stealing.. blackrock would have to dissolve shares that were linked to said baskets via buying shares back fro their AP, by which the aP would need to buy back shares from their customers
this is not a easy fast cheap, beneficial process for all those involved. which is why investments come with risk statements like "you can lose some or all of your invested funds"

shares do not come with guarantees/fixed rate returns.
when the underlying companies have bad performance they do not honour shares at fixed contract rate, but adjust the shares price based on a market rate.. a market rate which can implode and de-peg from whatever index it previously followed

Yes it’s probably true that if day Blackrock lost its private key or some hacker took the funds bitcoin, then the investor in the fund would most likely just get a cash equivalents like the MtGox or Ftx bankruptcy’s.

However I don’t think they will shut down or lose their Private keys or get hacked. I am sure they have proper custody of those bitcoins. The only way I see an etf shutting down is most likely due to lack of demand for the fund. If GBTC loses all their customers, they will most likely shut down since they can’t compete with the larger etf providers. Why invest with GBTC at a high rate when you can choose a better etf with lower fees.

It honeslty can't hurt to diversify your holdings. Of course this is not the same as holding BTC and keeping your own keysl but it is no different than owning stocks or other comparable assets. These ETFs will be a great hedge for investors and prove to be probably one of the best investments or little corners of their portfolio that they wish they always bought more of  

Yes this is correct quite a few 401k's including mine allow you direct control of investments through a linked brokerage account. They charge an annual fee for it but it is modest particularly in my case as I have a fairly good sized balance in the account.

Could be huge and you're definitely onto something with this 401k retirement fund powered by the crypto titan, but the thing is that since this is an ETF, how secure are you that you're getting your money's worth. I mean, what are the pros and cons that you're looking at cause as far as I know, buying bitcoin outright from users or getting it straight from the people is still a better concept for investments against a paper telling you that you own x amount of bitcoins with nothing to show for it.

At the end of the day you could've done the same thing with buying bitcoin outright and investing through DCA strategy, eventually you'll still get the same amount of money (in theory) and the only thing that you'd really have to worry about is losing your money through belligerent usage or hacking, and perhaps crashes when you're just about to cash it all out. But I reckon you'd deal with the same sets of problems in ETFs as you would've with buying the real thing out, with the teeny tiny added benefit of getting the peace of mind that you can blame someone else besides yourself when it happens.

I see bitcoin ETFs as a sustainable way to really get the whole bitcoin bull run machine running, but I don't see it being very useful to us who are already in the crypto space to begin with. Matter of fact I see it as a way to get those boomers and their coveted millions from destroying the planet and the economy to invest in this technology and possibly give the Gen Zs a chance at life for once.

but people still think they are buying ownership shares of bitcoin and they think if anything goes wrong with an ETF they as creditors can claim/redeem shares for BTC "in-kind"... i just corrected that false narrative where share holders do not prosper nor get btc if a ETF closes out/bankrupts/dissolves offering

so although ETF offers discounted PRICE exposure due to pre-tax access to spot exposure. it does not mean ownership stake of BTC

The people who buy Bitcoin ETF for the 401k plan are usually not those who buy Bitcoin for idealistic reasons, but because of the possible positive price development. All those who are idealistic will still buy "real" bitcoins and put them on their self-hosted wallet.

Thank you for clearing this misconception, I thought investors indirectly owned the coin. However, this post has even shown that investing through these ETF providers makes the process more complicated than I thought. It's a choice and everyone is free to make their Investment decision.

I wonder why people will prefer to invest through a third party when the have ample opportunity to buy Bitcoin directly and hodl it as much as they can. They don't mind going through all the complicated processes instead of spending time to learn how to keep their coin. Some of them have come up with some explanation justifying this move but I still think it is safer and better keep your keys.

Why the ETF when you are having bitcoin to invest, you stand to loose one great opportunity which is what locks you under centralization while dealing with a centralized organization like Fidelity, don't you think you're signing in to their terms and condition could impose a future danger in you later in future, but with bitcoin, there's no need of going through all these because you're investing on a decentralized digital network with bitcoin.

This is so true. I learned a lot frim here since I started. Re ETFs that offer convenience, they may not provide the same level of control and privacy as direct ownership. It's essential to weigh the pros and cons to make informed investment decisions that align with personal preferences and goals

I assume your pension fund is going to be a very long term investment for you. As I don't know your age I am assuming this. Historically we have seen, Bitcoin has given a very very good return during long term investment. So I am fairly confident that your investment into Bitcoin through your pension fund will give you the highest return compared to all other asset classes.

Also I believe your pension fund is going to be tax free when you will reach your retirement age. If that is the case then you should be in a good position.

once people realise they have no ownership claim of actual bitcoin and cant redeem bitcoin "in-kind" of shares
the benefits they can have of the ETF price exposure is mainly tax related saving for exposure to a market price:

when using pre-tax income, its like discount
if employer matched, its like 2x

think about it if you earn say $35k salary
using https://smartasset.com/taxes/income-taxes (advance)
putting $4660 as your investment pre-tax into 401k (which should be enough shares to be exposure equivalent to spot price of 0.1btc right now)


your take home difference is not $4660 but only $3895 thus a discount
of 0.1($4660)exposure equivalence(but not ownership) you only paid $3895
if you have employer match
of 0.2($9320)exposure equivalence(but not ownership) you only paid $3895