Summary Fidelity’s Wise Origin Bitcoin ETF offers superior Bitcoin exposure and minimizes security risks by using in-house custodial services, unlike most other Bitcoin ETFs. FBTC provides maximum Bitcoin exposure per share, outperforming peers, making it a top choice for investors seeking Bitcoin exposure through ETFs. The fund's shares outstanding are managed well versus Fidelity's Bitcoin treasury making this a superior ETF compared to other Bitcoin ETFs. Bitcoin's positive market sentiment and bullish institutional demand suggest continued momentum, supporting a Buy rating for FBTC. Despite Bitcoin's volatility, structural catalysts and a crypto-friendly US administration present opportunities for investors to buy the dip in Bitcoin ETFs like FBTC. Investment Thesis By the end of this week, most Bitcoin ETFs will be celebrating their first anniversary since being launched on the public markets last year. The sentiment around Bitcoin ( BTC-USD ) has been phenomenal over the past year as a cohort of multiple macro catalysts converged to keep the investible momentum of key digital assets, including Bitcoin, elevated. As Bitcoin gains more widespread traction among global markets for its investability from a macro standpoint, investors are responding to the positive traction seen in the digital asset space by allocating a growing share of their portfolio towards Bitcoin. Bitcoin ETFs have offered investors a fairly easy way to gain exposure to Bitcoin without the hassles of custody and security. Fidelity’s Wise Origin Bitcoin ETF (BATS: FBTC ) does more than just give investors exposure to Bitcoin. It actually is one of the few ETFs that offers the maximum exposure to Bitcoin noted via the Bitcoin Per Share metric. Along with higher exposure, Fidelity also strips away custody concentration risk by opting for self-custody of its Bitcoin stash. This makes FBTC my top pick for investors to gain exposure to Bitcoin, and I recommend a Buy on FBTC. FBTC Offers Multiple Advantages Over Other ETFs - Superior Bitcoin Exposure Is One Of Them As noted in Fidelity’s fund prospectus , the FBTC fund’s investment objective “is to seek to track the performance of Bitcoin,” and it tracks Bitcoin’s performance via its own Fidelity Bitcoin Reference Rate index . Fidelity’s index is essentially the firm’s own reconstitution of Bitcoin’s price using live feeds from the live spot price of Bitcoin versus the USD and is volume-weighted. Like most spot Bitcoin ETFs, Fidelity offers investors exposure to Bitcoin, and investors can gain exposure to Bitcoin by just buying shares of FBTC. But, unlike most spot Bitcoin ETFs, Fidelity keeps custody of its own Bitcoin treasury via its Fidelity Digital Asset Services, and herein lies one of the key advantages of using FBTC as an investment vehicle over the other Bitcoin ETFs to gain exposure to Bitcoin. As seen in Exhibit A below, Fidelity is the only Bitcoin ETF, apart from VanEck’s Bitcoin Trust (BATS:HODL), that does not use Coinbase (NASDAQ: COIN ) as the primary asset custodian. While Coinbase has positioned itself as a compelling candidate to offer custody services and is quite capable of continuing to offer these services, it also has to deal with an increasing amount of security risk with every additional customer that Coinbase offers custody services to. From the exhibit below, it's clear that Coinbase alone is responsible for cumulatively safekeeping almost 900k Bitcoin from all the other ETFs apart from FBTC and the futures Bitcoin ETF ProShares Bitcoin ETF ( BITO ). I believe FBTC has done the right thing by going against the grain and using its in-house custodial services, thus minimizing the security risk most other ETFs undertake by placing their custodial faith in a single entity counterparty such as Coinbase. This will serve FBTC and its investors well were there to be a security lapse in the single custodial entity. Exhibit A: How Fidelity’s Bitcoin ETF stacks up against its peers (Author's compilation) The other reason I prefer FBTC over its spot Bitcoin peers is the superior exposure to Bitcoin that Fidelity’s Bitcoin ETF provides as compared to its peers. For Bitcoin ETFs, a proxy measure I use to quantify investors’ exposure to Bitcoin is via the Bitcoin per share metric that I calculate using the fund's Bitcoin holdings versus its shares outstanding. Every investor that buys shares in their respective Bitcoin ETF aims to gain exposure to Bitcoin. And my estimates suggest FBTC is well placed to offer maximum exposure to Bitcoin since it has a superior Bitcoin-per-share metric. In Exhibit A above, I compiled a list of the top 7 Bitcoin ETFs by AUMs along with their Bitcoin treasury holdings. After noting their last known shares outstanding base per ETF, my estimates suggest that FBTC provides investors with about 88k satoshis or 0.00088 BTC. Only 21 Shares/ARK’s Bitcoin ETF ( ARKB ) rivals FBTC in terms of Bitcoin exposure. This is one of the reasons why FBTC and ARKB marginally outperform most other Bitcoin ETFs since inception last year due to the superior Bitcoin exposure per share. Exhibit B: Fidelity’s Bitcoin ETF outperforms its peers since launch last year. (note: BITO's performance is adjusted for yields) (tradingView) Over the past year, FBTC has managed its Bitcoin holdings and shares outstanding in a manner that is in the highest interest of its shareholders, relatively speaking. In terms of my outlook for Bitcoin, which is the underlying asset for all Bitcoin ETFs, I recently published a note on BlackRock’s Bitcoin Trust ETF ( IBIT ) last month, where I noted that global liquidity cycles continue to favor another strong year for Bitcoin. Most market predictions call for Bitcoin to end 2025 anywhere between $150k and $250k. Consensus estimates settle at ~$200k, which indicates a strong year for Bitcoin. This should be a compelling enough reason for most Bitcoin ETFs to continue outperforming markets this year too. If Fidelity can continue managing its Bitcoin hoard consistently in line with its outstanding share base, it should give investors another compelling reason to value FBTC above other Bitcoin ETFs due to the superior Bitcoin exposure. In addition, an expense fee that is competitive compared to peers as well as minimized single-entity custody risk that I explained at the start of this note should also help FBTC investors. Risks & Other Factors To Know It is possible that Bitcoin could pull back further due to the strong run-up the digital currency had since the US election results. If this pullback occurs, ETFs such as FBTC will provide investors with an opportunity to buy the dip since I expect structural catalysts for Bitcoin to remain intact. By now, most investors are also aware that bitcoin is a fairly volatile asset versus other macro assets so investors will have to deal with a fair amount of volatility that is usually not seen in other asset classes. Takeaway Many catalysts still lie in place for Bitcoin to continue another bull run this year. An incoming US administration that is regarded as crypto-friendly, global liquidity that should positively support Bitcoin’s momentum, as well as bullish institutional demand, should keep the momentum going. In such cases, FBTC offers superior exposure to Bitcoin for those investors who are looking to gain exposure to Bitcoin via the ETF route. I recommend a Buy rating on the FBTC ETF.
