- January 30, 2024
- Posted by: [email protected]
- Category:
BlackRock’s iShares Bitcoin Trust (IBIT) has achieved a significant milestone, surpassing $2 billion in assets under management (AUM) within just two weeks of its launch on the Nasdaq. This achievement is closely tied to Bitcoin’s recent surge, which saw its price break through the $42,000 mark for the first time in nearly seven days, following a sell-off triggered by the launch of ETFs on January 11.
The rapid growth of BlackRock’s IBIT is attributed to the strong intraday performance of Bitcoin, solidifying its position as a leader in attracting investor capital. In comparison, Fidelity’s Wise Origin Bitcoin Fund (FBTC) trails behind with $1.8 billion in inflows over the past 10 days.
Leveraging its status as the world’s largest asset manager, BlackRock has strategically positioned its crypto-based product to appeal to a broader audience. In contrast to some asset managers targeting early adopters through television ads, BlackRock opted for a different approach. The company released a two-minute video featuring an executive explaining Bitcoin’s value proposition, specifically targeting baby boomers.
The competitive landscape in the Bitcoin spot ETF market is influenced by factors such as reputation, size, existing footprint, and management fees, according to Aurelie Barthere, Principal Research Analyst at Nansen. BlackRock set its iShares ETF fee at 0.12% for the first 12 months or until the first $5 billion AUM, planning to increase it to 0.25% thereafter. This fee structure, along with others from different issuers, is deducted from the ETF’s performance rather than billed directly to investors, impacting overall returns.
Analysts, including those at JPMorgan, emphasize the pivotal role of fees and liquidity in determining the success of newly created ETFs. They anticipate significant outflows from the Grayscale Bitcoin Trust (GBTC) due to its high 1.5% fees. Meanwhile, Bloomberg analyst James Seyffart predicts that Bitcoin ETFs will attract $10 billion in capital over the first year.
The rapid ascent of BlackRock’s IBIT underscores the growing demand for cryptocurrency investment products, signaling the increasing integration of Bitcoin into traditional financial institutions. As investors seek exposure to the crypto market, ETFs emerge as a regulated and convenient avenue for participating in the potential upside of cryptocurrencies, particularly Bitcoin.
