IBIT vs. Buying Bitcoin Directly — Which Is Right for You?

The Short Answer

Both IBIT and buying Bitcoin directly give you exposure to Bitcoin's price. The difference is how you hold it. IBIT is a stock you buy through a brokerage; direct Bitcoin is the asset itself, bought on a crypto exchange and optionally held in your own wallet. Neither is universally “better” — the right choice depends on your priorities around taxes, fees, custody, trading hours, and control.

The Core Difference

IBIT (iShares Bitcoin Trust). You buy shares of a fund that holds Bitcoin on your behalf (see BlackRock's IBIT page). BlackRock manages the trust and stores the Bitcoin via Coinbase Custody. You trade IBIT through any stock brokerage during market hours. You never touch actual Bitcoin — your ownership is via shares representing a fraction of the fund's holdings.

Direct Bitcoin. You buy Bitcoin itself on a crypto exchange (Coinbase, Kraken, Gemini, etc.) or peer-to-peer. You can leave it on the exchange or withdraw it to a personal wallet. You own the actual asset and control how you use it.

IBIT is Bitcoin exposure through traditional finance rails. Direct Bitcoin is the asset itself. Everything else follows from this distinction.

Note that IBIT's share price doesn't exactly match Bitcoin's price — each share represents a fraction of a Bitcoin, and small premiums or discounts can appear. For details, see why IBIT's price doesn't match Bitcoin.

Side-by-Side Comparison

Each row has a winner depending on what you value. Neither column is universally better.

Where IBIT Wins

Simplicity. IBIT lives where your stocks live. No new accounts, no crypto exchange KYC, no wallet setup. If you already use a brokerage, buying IBIT takes seconds.

Retirement accounts. IBIT can be held in a traditional IRA, Roth IRA, 401(k), or HSA. This unlocks tax-deferred or tax-free Bitcoin exposure — especially powerful in a Roth, where qualified gains are never taxed. Direct Bitcoin in retirement accounts requires specialized self-directed IRA providers with higher fees ($200–500/year) and more complexity.

Tax simplicity. Your broker tracks cost basis and reports gains and losses on a 1099-B. No crypto tax software, no reconciling transactions across wallets. For details, see our guide on how IBIT is taxed.

Options market. IBIT has a deep, liquid options chain. If you want to sell covered calls, buy protective puts, or trade spreads on Bitcoin exposure, IBIT is the most practical vehicle.

No custody burden. You don't manage private keys or worry about wallet security. If you lose your brokerage password, you call customer service. If you lose a Bitcoin private key, the funds are gone permanently. For details on how BlackRock stores and secures IBIT's Bitcoin, see our custody guide.

Where Direct Bitcoin Wins

24/7 trading. Bitcoin trades around the clock, including weekends and holidays. If Bitcoin crashes 20% on a Saturday night, direct holders can act immediately. IBIT holders wait until Monday at 9:30 AM ET — by which point the price may have already recovered or fallen further.

No ongoing fees. Once you buy Bitcoin, holding it costs nothing. IBIT charges 0.25% per year, which slowly erodes your BTC-per-share exposure over time. Over a decade, that drag adds up.

Self-custody and control. You can withdraw Bitcoin to a hardware wallet and remove counterparty risk entirely. You can also send Bitcoin to anyone, use it in DeFi protocols, earn yield, collateralize loans, or spend it directly. IBIT shares are just shares — they live in your brokerage and nowhere else.

No wash sale rule (currently). Direct Bitcoin holders can sell at a loss and immediately rebuy to harvest tax deductions — no 30-day waiting period. This may change (the IRS has proposed extending wash sale rules to crypto), but it's an advantage today. For ETF-specific harvesting strategies, see our guide on tax loss harvesting Bitcoin ETFs.

The Fee Question

Fees are often the deciding factor, and the comparison is more nuanced than it appears.

IBIT: Typically $0 to buy (zero-commission brokers), but you pay 0.25% per year in expense ratio. On a $10,000 position, that's roughly $124 in cumulative fee drag over 5 years and $247 over 10 years.

Direct Bitcoin: One-time exchange fee of 0.5%–1.5% (~$50–150 on a $10,000 purchase), plus potential network withdrawal fees. But holding costs $0 per year after that.

The breakeven: For holding periods under about 6 years, total fees are roughly comparable. Beyond 6 years, direct Bitcoin becomes meaningfully cheaper. For the full BTC-per-share erosion breakdown, see our expense ratio and fee drag analysis.

Which Should You Choose?

IBIT is likely a better fit if you:

• Want Bitcoin in a retirement account (IRA, 401(k), Roth)
• Prefer to keep everything in one brokerage account
• Want to trade options on Bitcoin exposure
• Value simple tax reporting (1099-B, broker handles everything)
• Don't want to manage wallets or private keys

Direct Bitcoin is likely a better fit if you:

• Want 24/7 market access
• Plan to hold long-term and want to avoid ongoing fees
• Value self-custody and full control of your asset
• Want to use Bitcoin beyond price exposure (DeFi, payments, collateral)
• Want flexibility around tax loss harvesting (today)

Many investors hold both — IBIT in retirement accounts for tax advantages, and direct Bitcoin in personal wallets for flexibility and control. This isn't a compromise — it's often the most practical approach. If you currently hold IBIT and want to switch, see our step-by-step conversion guide. Curious how your IBIT position would have grown? Try our Bitcoin ETF performance calculator to model historical returns.

Calculate your IBIT position value →

See how IBIT's expense ratio affects long-term holdings →

Understand IBIT's tax treatment →

Compare all six Bitcoin ETFs side by side →

Best Bitcoin ETF in 2026 — full comparison guide →

More Bitcoin ETF guides →

FAQ