Bitcoin ETF fees
vs self-custody.
A spot Bitcoin ETF charges a small annual fee, around 0.25% for IBIT and FBTC. That sounds trivial. Compounded over decades on a volatile, appreciating asset, it is not. This shows the lifetime cost of that fee against holding your own keys for zero.
IBIT and FBTC are about 0.25%. Some funds waive fees temporarily, then charge more.
Illustrative only. Bitcoin's past returns are far higher and far more volatile; the fee cost scales with whatever the asset does.
Fee applied annually to the balance. Your numbers stay in your browser.
This is not a reason to blindly self-custody. An ETF is simpler, fits inside a Roth or 401(k), and removes the risk of losing your own keys. Self-custody removes counterparty and fee risk but puts the security burden entirely on you. The fee is one input into that decision, and over decades it is a bigger one than most people assume.
What this tool assumes
- The expense ratio is charged once a year on the full balance. Real funds accrue it daily, which is close to the same over long horizons.
- The same return is applied to both paths; only the fee differs. Self-custody is modeled as zero ongoing cost, which ignores the one-time cost of a hardware wallet and your time.
- The return input is illustrative, not a forecast. Bitcoin is extremely volatile and has fallen more than 80% multiple times.
- Tax treatment is ignored. An ETF inside a Roth grows tax-free, which can outweigh the fee for some savers. This tool isolates the fee only.
Methodology and questions
How is the fee drag calculated?
Each year, the balance grows at the assumed return, then the expense ratio is subtracted from the balance. Self-custody grows at the same return with nothing subtracted. The gap at the end is the fee plus all the growth that fee would have earned.
Is the ETF ever the better choice?
Often, yes. Inside a tax-advantaged account, for someone who would otherwise not secure their keys well, or who values simplicity, the ETF can be right despite the fee. The point is to see the fee clearly, not to pretend it is the only factor. Compare the custody tradeoffs on ETF vs self-custody.
Does self-custody really cost nothing?
No ongoing fee, but a real one-time cost: a hardware wallet, the time to learn it, and the discipline to back up and test your recovery. That is the trade. Start with custody levels.
Not financial advice. Illustrative math. Your numbers stay in your browser.