Buy Bitcoin vs Bitcoin ETFs: A Comprehensive Comparison

Spot Bitcoin ETFs have brought Bitcoin into the world of shares and managed funds, but that raises an important question. Should you buy a Bitcoin ETF, or buy Bitcoin itself?

Both options give you exposure to Bitcoin’s price. They just do it in very different ways.

Bitcoin has traded for more than a decade and has let people act, in some ways, as their own bank. Things changed in a big way in January 2024 when the U.S. Securities and Exchange Commission (SEC) approved the first Spot Bitcoin Exchange Traded Funds (ETFs).

Suddenly, Bitcoin started sitting alongside superannuation investments, ETFs and tech stocks in traditional portfolios. This helped many people see Bitcoin as a more mainstream investment, but it also created a new problem for beginners. Do you buy the ETF, or do you buy actual Bitcoin?

The sections below compare both approaches, with a focus on control, fees, and day‑to‑day usefulness.

Understanding the difference

What is a Spot Bitcoin ETF?

A Spot Bitcoin ETF is a fund that trades on regular stock exchanges, similar to a gold ETF. When you buy shares in a Bitcoin ETF, you are not buying Bitcoin itself. You are buying a unit in a fund that holds Bitcoin on your behalf.

The fund manager (for example, BlackRock or Fidelity in the U.S.) takes investor money, purchases Bitcoin, then stores it with a custodian. You never touch the Bitcoin directly. Instead, you hold a financial product whose value tracks the Bitcoin held by the fund.

In Australia, Bitcoin and crypto ETFs are still limited and subject to local regulation, so availability and structure can differ from what you may read about in U.S. markets.

What is direct Bitcoin ownership?

Buying Bitcoin directly means you exchange Australian dollars (AUD) or other fiat currency for Bitcoin on a crypto exchange such as CoinJar. In this case, you own the asset itself.

You can leave your Bitcoin on the exchange, or move it to a personal wallet. Many long‑term holders use a hardware wallet (often called cold storage) that keeps their private keys offline. This approach fits closely with Bitcoin’s original idea of decentralised, peer‑to‑peer money that anyone can hold and transfer.

The case for Bitcoin ETFs: Convenience and regulation

For many traditional investors, the hardest part of getting started with Bitcoin is not the asset, it is the technology. Wallets, private keys and seed phrases can feel overwhelming.

Bitcoin ETFs aim to remove that friction.

No major learning curve

If you already buy shares or managed funds, buying a Bitcoin ETF will feel familiar. You log into your brokerage platform, search for the ETF’s ticker, and click buy.

You do not need to:

• Set up a crypto exchange account.
• Learn how wallets, addresses, or seed phrases work.
• Worry about sending funds to the wrong address.

This simplicity can be especially appealing to people who see Bitcoin purely as an investment, rather than something they plan to use for payments or transfers.

Regulatory oversight

ETFs are heavily regulated financial products. Fund managers and custodians must meet strict standards around reporting, auditing and asset storage.

For some investors, particularly institutions, family offices or advisers operating under compliance frameworks, this structure is more comfortable than holding Bitcoin directly. It brings Bitcoin exposure into an environment they know and understand, with rules set by regulators.

In Australia, any crypto ETF must comply with local laws and ASIC guidance, and will usually sit on recognised exchanges such as the ASX or Cboe Australia.

Tax and reporting integration

Because ETFs sit inside traditional brokerage accounts, they usually integrate cleanly with:

• Standard end‑of‑year tax reporting tools.
• Existing investment platforms and portfolio trackers.
• Tax‑advantaged structures such as self‑managed super funds (SMSFs), subject to local rules and fund deeds.

You still need to keep good records and understand your tax obligations, but you are dealing with familiar systems and statements.

The case for buying Bitcoin: Control and utility

While ETFs make Bitcoin easier to access, they also strip away many of the features that make Bitcoin unique. When you buy the asset directly, you keep those features.

24/7 access and liquidity

Bitcoin markets trade around the clock, including weekends and public holidays. There is no closing bell.

If you hold Bitcoin directly, you can buy, sell or transfer it at any time that your chosen exchange or wallet supports. If the price moves sharply on a Sunday night, you can act immediately.

By comparison, a Bitcoin ETF only trades during stock market hours. If significant price moves happen while markets are closed, ETF investors may have to wait until the next session to adjust their position.

True ownership and less counterparty risk

When you hold Bitcoin in a non‑custodial wallet, you control the private keys. In simple terms, that means no bank, broker or platform can freeze, block or re‑hypothecate your Bitcoin.

This reduces what is called counterparty risk, the risk that the institution storing your assets might fail, change its policies or limit withdrawals. In the Bitcoin world, this is often summed up as: “Not your keys, not your coins.”

ETF holders do not own specific Bitcoin. They own a claim on a fund that owns Bitcoin. They must trust both the fund manager and the custodian.

Practical utility and payments

An ETF can only be bought or sold for cash through a broker. You cannot send ETF units to a friend, or pay a business invoice with your ETF holdings.

Bitcoin itself is different. If a business or individual accepts Bitcoin, you can pay them directly from your wallet. You can also:

• Move value internationally without relying on banks.
• Split payments between multiple people.
• Integrate with services that support Bitcoin or the Lightning Network.

This gives Bitcoin a use case that goes beyond price speculation.

Fee structure and long‑term holding

ETFs charge an annual management fee, also called an expense ratio. This fee is often quoted as a percentage per year, for example 0.20% to 1.50%. It is taken from the fund’s assets over time, which slightly reduces your return each year.

With direct Bitcoin purchases, you usually pay:

• A spread or trading fee when you buy or sell.
• Network fees when you send Bitcoin on‑chain.

However, there is no built‑in annual management fee just for holding your Bitcoin. If you plan to hold for many years, avoiding that ongoing fee can make a noticeable difference to your long‑term outcome, especially for larger balances.

Real‑life examples: How the experience differs

To make the contrast clearer, imagine how two investors might approach Bitcoin.

The ETF investor

Sarah wants some Bitcoin exposure, but she does not want to set up a crypto account or learn how wallets work. She logs in to her regular share trading platform on a Tuesday morning.

She finds a Spot Bitcoin ETF that meets her needs and buys units using the available cash in her account. Her Bitcoin position now appears next to her Australian shares and index funds. She is happy with the simplicity and the familiar interface.

That weekend, Bitcoin drops 10%. Sarah reads the headlines and decides she might want to reduce her position. Because she holds an ETF, she cannot trade until the stock market opens on Monday.

The direct buyer

Tom wants to own Bitcoin itself and is curious about using it in the future. He creates an account with CoinJar, completes the required identity checks, and buys Bitcoin using AUD.

He transfers half of his Bitcoin to a hardware wallet for long‑term storage and leaves the other half on CoinJar for easier access. He writes down his recovery phrase and stores it securely.

A year later, Tom finds a seller offering a vintage watch and accepting Bitcoin. He sends the payment directly from his wallet to the seller’s address. During the time he was holding, he did not pay any annual management fee, only the original trading fee and the network fee for his outgoing transaction.

Risks and security considerations

Bitcoin carries risk regardless of how you access it. The type of risk just looks different with ETFs compared to direct ownership.

Risks of Bitcoin ETFs

• Market hours and price gaps
  Because ETFs only trade during stock exchange hours, their price may not always perfectly match the spot Bitcoin price. In periods of high volatility, this can create small gaps or tracking differences.

• Custodial or structural failure
  Reputable issuers and custodians are heavily regulated and typically have strong controls, but there is still some level of structural risk. If the custodian or fund structure encounters legal, operational or solvency issues, investors may face delays or uncertainty in asset recovery.

ETF investors rely on the regulator, the issuer and the custodian to manage these risks.

Risks of direct Bitcoin ownership

• User error and key loss
  If you self‑custody your Bitcoin and lose your private keys or recovery phrase, there is no central support desk that can restore access. Once lost, that Bitcoin is effectively gone.

• Security and scams
  Direct holders must stay alert to phishing, fake websites and malicious apps. You should:

  • Use reputable exchanges and official apps.
  • Enable Two‑Factor Authentication (2FA).
  • Double‑check wallet addresses before sending.

Good security habits matter as much as the technology itself.

Summary: Which is right for you?

There is no single correct answer. The better option depends on what you want from your Bitcoin exposure.

Choose a Bitcoin ETF if:

• You prefer to invest through a traditional brokerage or superannuation structure.
• You are not comfortable managing digital wallets, private keys or recovery phrases.
• You mainly care about Bitcoin’s price exposure, rather than using it day to day.

Choose direct Bitcoin if:

• You want 24/7 access to buy, sell and transfer your holdings.
• You want to avoid ongoing management fees and are focused on long‑term holding.
• You value self‑custody and want the option to use Bitcoin for payments or international transfers.

Some investors use a mix of both approaches. For example, they might hold a small amount of Bitcoin directly for flexibility, and use an ETF inside a long‑term portfolio or super fund.

Why Bitcoin matters

Whether you choose a Spot ETF or buy Bitcoin directly, the growing range of options shows how far Bitcoin has come. What started as an internet experiment is now considered, by many, a recognised asset held by individuals, companies and institutions around the world.

At the end of the day, the “best” way to get exposure is the one that fits your goals, your risk tolerance, and how involved you want to be. If your chosen method lets you sleep well at night and you understand the trade‑offs, you are probably on the right track.