Benzinga - Known for his many businesses and starring on Shark Tank, Kevin O'Leary certainly has a wealth of business expertise. However, in 2024, he shifted his focus more toward cryptocurrency, discussing it in several interviews and even investing in some cryptocurrency businesses. He recently discussed his views on the slew of bitcoin ETFs that were released in January 2024.
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These ETFs were approved by the SEC in early January and allowed some of the largest names in finance and asset management to begin offering spot bitcoin ETFs. Firms such as BlackRock and Fidelity began offering the ETFs to their customers, and they have become the most successful ETF launch in history, amassing tens of billions in investment within months.
However, O'Leary does see the value of a personal investment in the ETF. "I think it’s great that finally we have a Bitcoin ETF because there’s many people that would own Bitcoin through an ETF. I would never do that. Why would I pay the fees? There’s no added value to an ETF. I just own the coin directly," he noted.
According to O'Leary, the management fees on the ETFs are a deterrent to his investment. The ETFs charge anywhere from 0.24% to 1.5% as management fees for purchasing and holding the bitcoin for their customers. This means that the sponsor of the ETF will require an annual payment, usually taken from the gross returns of the fund on top of any fees that the brokerage may charge. So, if you make $100 from the spot bitcoin ETFs, you will receive anywhere from $99.74 to $98.50 after the fees are taken out.
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However, this contrasts with owning bitcoin directly. Since bitcoin is decentralized, the only fees that are charged are those that cover the transaction cost. While the fees can vary based on the supply of verifiers and the demand for transactions, the average transaction fee usually hovers between $1 and $2.
Additionally, owning bitcoin directly allows for other benefits. As a direct owner, you have discretion over how the tokens are used. This means that you can stake the tokens to receive interest or send them to others as a form of payment. Owning bitcoin directly allows you to use bitcoin to the fullest extent, whereas the ETFs simply allow you to access the price movements.
While owning the token directly has its benefits, O'Leary still acknowledges that the ETFs are a positive for the crypto community. "What I really like about it is it’s sending a signal that the era of the crypto cowboy is over and that now financial services companies that are forced, and want to be regulated because that’s how they do business, can start to embrace crypto technology, including digital payment systems, into their portfolios. And so the first step is this bitcoin ETF, and it was well received," he said.
With all of that in mind, O'Leary is bullish on bitcoin and owns a "5% weighting" of bitcoin in his portfolio.
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