Jun 4, 2024

Don't Sell Your Bitcoin to BlackRock

Don't sell your Bitcoin to BlackRock. Learn why self-custody is key to Bitcoin's core principles and how it protects you from the risks of ETFs.

Don't Sell Your Bitcoin to BlackRock

What is BlackRock?

BlackRock is the world's largest asset managers, boasting over $10 trillion in assets under management (AUM). BlackRock is a behemoth in the investment world, known for its vast array of financial products, including mutual funds and exchange-traded funds (ETFs). But selling your bitcoin to BlackRock might not be in your best interest.

BlackRock's Business Model

BlackRock's business model is to create financial assets for its customers, charging fees for their different products. The firm's sheer size and reach make it a repository of wealth for many people, from everyday investors to the world's richest individuals and institutions. BlackRock gives institutional investors and pension funds access to various asset classes, and they make significant profits from the trillions of dollars in AUM.

Their primary goal is to maximize profits for their shareholders, so their decision-making process may be influenced by factors entirely disconnected from what is best for individuals. And because of their size, they have a large influence on the markets, regulations, and policy decisions.

The Ideology of Bitcoin vs. Centralized Institutions

Bitcoin was developed to provide anyone who holds it with decentralization money and financial sovereignty, a system that does not require trust. It was created as a response to the inefficiencies and failures of the centralized financial system, such as those managed by traditional central banks. Those who sell their bitcoin to an institution like BlackRock subvert these core values, which will ultimately keep them from enjoying the benefits that Bitcoin can provide.

One of the best ways for Bitcoin to become more prolific is by individuals saving in it and using it as they see fit. By concentrating ownership in the hands of a few, such as major investment managers and mainstream institutions rather than holding it for themselves, individuals can no longer experience the majority of Bitcoin's benefits.

BlackRock's Bitcoin ETF

BlackRock's Bitcoin ETF has seen incredible success, indicating strong demand. Since the ETF's launch in January, BlackRock has acquired more than 284,000 bitcoin, according to Apollo. The spot Bitcoin ETFs began trading on January 11, 2024, less than one hundred trading days ago. This means that the daily intake has averaged over 2,800 BTC per day. Every day, only 450 new bitcoin are issued. On average, BlackRock alone purchases many times more than the daily issuance. When individuals sell their bitcoin, it is very likely that BlackRock or another institution is buying it.

While the Bitcoin ETFs have certainly created some positive price movement for Bitcoin, individuals need to consider whether or not they wish to give up the opportunity and sovereignty that Bitcoin provides in exchange for the ease and familiarity that ETFs provide. Reflect carefully before selling bitcoin or buying the ETFs rather than the underlying asset.

The Case for Self-Custody

Principles of Self-Custody

Self-custody is the more sovereign and secure alternative to purchasing the ETFs. This means that someone holds their bitcoin without intermediaries. They can take advantage of the opportunity Bitcoin gives individuals to be their own bank. This approach provides:

  • Financial Independence: No reliance on third parties like traditional asset managers.
  • Security: Protection against institutional risk factors like sudden regulatory changes or management fee hikes.

Benefits of Self-Custody

  • Financial Control: You manage your investment strategy, operational burdens, and security measures.
  • Reduced Trading Costs: Avoid management fees associated with institutional handling of digital assets.

Practical Steps for Self-Custody

Self-custody can seem daunting to newcomers, which is why some opt for ETFs over holding the private keys to their bitcoin. To learn more about this topic, read this article, which discusses Bitcoin keys, wallets and addresses, and provides helpful guidance on which option might be best for you.

Key Points Recap

  • Centralized institutions like BlackRock inherently conflict with Bitcoin's decentralized principles.
  • Self-custody ensures financial sovereignty and reduces third-party risks.
  • Maintaining decentralization is beneficial for the long-term vision and integrity of Bitcoin.

So before rushing to sell your bitcoin or purchase the spot Bitcoin ETFs, consider what you’re giving up if you were to do so. In contrast, by self custodying your own Bitcoin, an individual can both embrace Bitcoin’s core values and retain ownership of the actual underlying asset rather than an ETF.

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