Bitcoin Spot ETFs have emerged as a leading way for investors to gain exposure to bitcoin, the world’s leading cryptocurrency, which has delivered tremendous returns since its launch in 2009. In 2024, the SEC approved bitcoin ETFs like IBIT and FBTC allowing retail and institutional investors to invest in the cryptocurrency on stock exchanges alongside other assets like the best stocks for 2025.

In this article, you’ll learn the key differences between the iShares Bitcoin Trust ETF (IBIT) and the Fidelity Wise Origin Bitcoin Fund (FBTC), how they compare in terms of fees, performance, management and security. While these bitcoin ETFs may not be right for some investors like the risk-averse or those who wish to hold bitcoin directly, they can provide exposure to an exciting asset which is rapidly gaining mainstream adoption.

Why Invest In Bitcoin ETFs Like IBIT And FBTC?

Investors may wish to invest in bitcoin in the first place, because of its strong performance, returning 47,116.2%% over the last 10 years and 997.9%% over the last 5 years. Depending on who you ask, bitcoin can serve as a promising speculative asset, an alternative store of value to the fiat currency like gold or a currency as it can serve as a means of exchange. A bitcoin ETF is most suitable for investors who wish to gain exposure to bitcoin as a speculative asset, earning a potential return from the asset’s growth.

Bitcoin Spot ETFs like IBIT and FBTC allow investors to invest in bitcoin’s price movements through traditional brokerage accounts without needing to store bitcoin assets themselves. These ETFs provide liquidity, regulatory oversight, and simple trading alongside stocks, bonds and other funds in your portfolio.

For investors who only wish to invest in bitcoin and not in other cryptocurrencies like Ethereum or Solana from their existing brokerage account, bitcoin ETFs like IBIT and FBTC are a good solution, rather than a cryptocurrency exchange like Coinbase.

The Basics Of IBIT And FBTC At A Glance

IBIT and FBTC both track the price movements of bitcoin but with differences in fees, how they’re structured, and their providers. Both of these bitcoin ETFs trade on the major stock exchanges like NYSE, allowing broad access to retail investors and institutional investors.

What Is IBIT?

IBIT is a bitcoin ETF managed by BlackRock, the largest asset manager in the world with $11.6 trillion under management. This ETF provides direct exposure to bitcoin price movements by holding bitcoin against its shares. BlackRock has a strong reputation of successful fund management with many established relationships across the global financial world, lending credibility to its bitcoin ETF.

What Is FBTC?

FBTC is a bitcoin ETF managed by Fidelity, another major asset manager with $5.8 trillion under management. Like IBIT, FBTC directly holds bitcoin against its shares, ensuring close price tracking of bitcoin. Fidelity is a commonly used asset manager by retail investors while BlackRock attracts more institutional investors. Fidelity has a long track record of engagement with cryptocurrency tracing back to 2014 when the firm began researching digital assets like bitcoin and blockchain technology.

Key Differences Between IBIT and FBTC

Historical Performance Comparison

Both IBIT and FBTC closely track the price of bitcoin as they hold bitcoin against shares. FBTC’s 1-year return slightly outperformed IBIT with FBTC returning 137.65% vs 137.32% but investors will likely earn comparable returns going forward. Future performance is dependent on the price movements of bitcoin and effective custody of bitcoin for both ETFs by their managers.

Comparing IBIT And FBTC Holdings

Both IBIT and FBTC hold bitcoin against their shares and closely track the price movements of bitcoin. The core holdings of IBIT and FBTC are identical as both are entirely invested in bitcoin. Slight differences may emerge based on fund management and liquidity.

IBIT Vs. FBTC Dividend Yields

Bitcoin is not an income generating asset like a bond or dividend-earning stock and neither IBIT or FBTC offer dividend yield to investors. Bitcoin ETFs like IBIT and FBTC are best suited to investors who wish to gain a return from capital appreciation rather than dividend yield.

Market Sentiment And Trends

Bitcoin is a speculative asset which can experience wild swings in price that retail investors may not be used to from traditional investing. For example, in February 2025, bitcoin experienced a 17% drop in value, followed by a 10% rally in March spurred on by speculation regarding a U.S. strategic cryptocurrency reserve. If the U.S. government invested in bitcoin through a strategic reserve, it would further shore up institutional adoption of the asset.

The launch of bitcoin ETFs like IBIT and FBTC in 2024 increased adoption of bitcoin by allowing retail and institutional investors to more easily invest in the cryptocurrency alongside major assets like the best ETFs on exchanges. Public companies can also add bitcoin to their balance sheet as Microstrategy notably has as well as asset managers who wish to add bitcoin to their portfolio. With increased regulatory clarity by the SEC, more investors may feel comfortable investing in bitcoin, increasing its market cap and price.

IBIT And FBTC Risk Comparisons

As mentioned, bitcoin is a volatile asset and both IBIT and FBTC can swing in price based on breaking news or market sentiment. Although regulatory clarity regarding bitcoin seems to be increasing, there is always the risk of adverse regulatory decisions affecting the price or availability of the asset in different markets. A risk which could potentially affect an ETF like IBIT or FBTC is a custody issue of bitcoin, like a hack or mismanagement of assets.

As with any investment, investors should weigh their risk tolerance before investing in a bitcoin ETF like IBIT or FBTC. A good rule of thumb for bitcoin ETFs and bitcoin generally is to not invest an amount you would lose sleep over losing the entirety of.

Tax Considerations

Bitcoin ETFs are subject to both short and long-term capital gains tax just like direct holding of bitcoin. One difference from a tax perspective is that bitcoin ETFs can be easily invested in through a traditional or Roth IRA, unlike direct holding of bitcoin. This can increase the tax efficiency of bitcoin investment as you may be able to defer taxes on bitcoin gains with a traditional IRA or not pay tax on these gains at all with a Roth IRA.

You should consult with a tax professional with cryptocurrency expertise if you’re concerned with the tax implications of investing in bitcoin ETFs.

IBIT Vs. FBTC: Pros And Cons

While IBIT and FBTC offer comparable bitcoin Spot ETFs, these ETFs differ based on expense ratios, asset manager strengths, and custody strategies.

IBIT Pros

• Lower Expense Ratio: IBIT has a slightly lower expense ratio of 0.12% compared with FBTC’s 0.25% fee.
• Strong Institutional Support: BlackRock is the world’s largest asset manager with over $11 billion AUM.
• High Liquidity : IBIT may attract more institutional investors and has higher net assets of $48.8 billion.

IBIT Cons

• Slightly Lower Performance: IBIT underperformed FBTC by 33 basis points, according to 1-year returns.
• Shorter Crypto Track Record: BlackRock only began offering cryptocurrency products like futures in 2021.
• Third-Party Custody: IBIT custodies through Coinbase Prime, as the majority of bitcoin ETFs, which may present third-party risk versus FBTC’s self custody.

FBTC Pros

• Cryptocurrency Expertise: Fidelity boasts over a decade of cryptocurrency expertise which may provide an edge in management and security.
• Self Custody: Fidelity self-custodies bitcoin for FBTC through Fidelity Digital Assets which may offer greater security.
• Slight Out-Performance: Based on 1-year returns, FBTC slightly outperformed IBIT by 33 basis points.

FBTC Cons

• Higher expense ratio: FBTC has a higher expense ratio than IBIT of 0.25%.
• Potentially Lower Liquidity: FBTC has lower net assets than IBIT of $16.6 billion.
• Lower Institutional Support: While still a major asset manager, Fidelity has less institutional usage than BlackRock.

Investor Suitability

IBIT may be better suited for investors who wish to track the price movements of bitcoin with a lower expense ratio of 0.12%, all managed by the largest asset manager in the world with strong institutional support. FBTC may be preferred by investors who don’t mind a slightly higher expense ratio in exchange for Fidelity’s self-custody model and a decade-long track record of cryptocurrency expertise.

Investors should further research both firm’s security protocols for custody as well as considering alternative bitcoin Spot ETFs and holding cryptocurrency directly as an alternative.

Bottom Line

IBIT and FBTC are very similar ETFs. They track the same asset and both are effective means for investors to gain exposure to bitcoin at low expense ratios from established asset managers. The ultimate decision of which ETF to choose for your portfolio comes down to reputation, minor expense ratio and performance differences, and the approach by which each firm custodies their bitcoin.

Bitcoin via a Spot ETF is an exciting asset to add to one’s portfolio. Rapid spikes and falls in price are an inevitability but since its inception, it has outperformed major indexes like the S&P 500. The launch of IBIT and FBTC through BlackRock and Fidelity respectively demonstrates mainstream interest and adoption by the financial services, providing the possibility for stellar returns to a greater number of investors.

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