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Bitcoin Rally Pushes BlackRock ETF Over $10 Billion in Record Time
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BlackRock’s Bitcoin exchange-traded funding hit $10 billion faster than any U.S. ETF in history, fueled by a rally that continues to send the world’s largest cryptocurrency to record highs .
It took BlackRock’s iShares Bitcoin Trust (IBIT) less than two months to reach this milestone, breaking Invesco QQQ’s record by just over a year, according to Morningstar. IBIT’s total assets now stand at approximately $12.7 billion, a combination of bitcoin appreciation and more than $7 billion in net inflows.
IBIT and the nine other spot bitcoin ETFs to which the Securities and Exchange Commission gave the green light on January 11 were supported by a rally that propelled the price of bitcoin above $70,000 on Friday, setting a new high before settling around $68,500 on Friday afternoon.
The 10 spot Bitcoin ETFs generated net inflows of about $7 billion combined from their launch in mid-January through the end of February, including $8.5 billion that investors withdrew from the Grayscale Bitcoin Trust ETF (GBTC) of $27.5 billion, according to data from Morningstar Direct. . The Fidelity Wise Origin Bitcoin ETF has amassed approximately $7.6 billion in assets, placing it second to reach $10 billion after its iShares counterpart.
Much of the recent investment in bitcoin ETFs appears to come from investors who were “trapped in GBTC” and abandoned the more expensive bitcoin ETF in favor of a cheaper alternative, said Dave Nadig, a longtime observer. ETF date that studied bitcoin ETF. business models.
Much of the large trading volumes on Bitcoin ETFs in recent weeks are the result of high-frequency traders, Nadig said. “It’s just algo players trying to scalp money.”
As high-frequency traders and hedge funds become increasingly interested in Bitcoin ETFs and arbitrage potential, the bulk of new assets leveraging BlackRock’s new cryptocurrency products appear to come from retail investors .
“Buyers of these products are primarily individual investors looking to access crypto through their tax-advantaged retirement and brokerage accounts,” said Zach Pandl, director of research at Grayscale.
GBTC had a head start on Bitcoin ETF assets since its launch over a decade ago, in a structure that made it difficult for investors to exit easily. But investors have abandoned the fund and its 1.5 percent management fee now that they can more efficiently shift their holdings to lower-cost alternatives, some of which have waived their fees entirely.
“We are incredibly proud of GBTC and what it means for the industry, and we intend to make it a competitive product over time,” Pandl said.
The rally following the SEC’s long-awaited approval of the bitcoin spot ETF has been so positive that Grayscale’s ETF net assets have nearly recovered since its conversion, allowing long-term holders term to get out and take advantage of bitcoin’s massive rise over the past decade.
Recent launches from JPMorgan and State Street Global Advisors all reached the $10 billion threshold in about two years, according to Morningstar. State Street’s SPDR Gold Shares ETF (GLD), launched in late 2004, also reached $10 billion relatively quickly, hitting that milestone in early 2007.
“I had high expectations, and this far exceeded them,” said James Seyffart, research analyst at Bloomberg Intelligence. “Demand is growing much faster.”
Seyffart said Bitcoin has become more secure since the ETF launched in January. “The likelihood of this going to zero is much less, especially after the SEC approved these ETFs, which eliminates some of the downside risk,” he said.
Bitcoin ETFs from iShares, Fidelity and Cathie Wood’s Ark Investment Management have absorbed the most new liquidity since their launch, while similar products from Wisdom Tree, Valkyrie and Franklin Templeton have performed less well, according to Morningstar data Direct.
Although WisdomTree’s $58 million bitcoin ETF hasn’t had as much luck gathering assets as most of its peers, “this is actually one of our most successful ETF launches.” more successful, even if we don’t accept an iShares volume level,” Will Peck said. , head of digital assets at WisdomTree.
“It helps that Bitcoin has been on a tear since their launch,” Peck said. “I expected it to be a ‘buy the rumor, sell the news’ kind of situation, but it shows how difficult it is to know anything with this asset class.”