BlackRock Bitcoin ETF: A Convenient and Secure Way to Invest in Bitcoin

BlackRock, the world’s largest asset manager, has launched the iShares Bitcoin Trust (IBIT), a spot Bitcoin ETF that gives investors direct exposure to Bitcoin through the familiarity of an ETF. IBIT eliminates the operational challenges and high costs of holding Bitcoin directly, and leverages the integration between BlackRock’s Aladdin® platform and Coinbase’s leading crypto exchange. IBIT is a cost-effective and secure way to access the potential of Bitcoin, the first and largest cryptocurrency in the world.

Bitcoin ETFs have seen a huge spike in inflows, surpassing the impressive mark of $2 billion. This reflects the growing interest and trust of investors in the crypto market, especially in Bitcoin.

BlackRock, the world’s biggest asset manager, has been a key driver of this wave of investment into Bitcoin ETFs. BlackRock’s participation shows the rising acceptance and adoption of cryptocurrencies in the traditional financial sector.

BlackRock bulls stampede into bitcoin ETFs

Bitcoin ETFs offer investors a regulated and convenient way to benefit from Bitcoin’s price fluctuations without having to own or trade the digital asset directly. This is a major advance in the incorporation of cryptocurrencies into conventional investment portfolios, appealing to both institutional and retail investors.

The ETFs have $13.48 billion worth of coins at $52,100 each, which is $2.08 billion more than the total amount invested in those funds so far. In the last five weeks, the group of new bitcoin-backed funds has attracted a total of $11.4 billion in capital inflows (excluding Grayscale Bitcoin Trust).

The money was then used by their respective issuers, a team of ten led by BlackRock, Fidelity, Ark, 21Shares, and Bitwise, to buy bitcoin on behalf of ETF shareholders.

This is mainly because IBIT has the largest AUM at 115,991 BTC ($6.04 billion) based on $5.17 billion in inflows, resulting in a current price gain of over $870 million, or 17%.

On the other hand, BTCO shareholders of Invesco-Galaxy are much ahead, though on a smaller scale.

BTCO has recorded net transactions worth $241.4 million and currently holds 5,970 BTC worth $311 million—a difference of 29% or almost $70 million.

Valkyrie, Fidelity, and VanEck funds have also outdone BlackRock by about 20%. The variations in unrealized profits among the different funds indicate the distinct buying patterns of different investor groups.

For example, plotting BlackRock inflows against the price of BTC shows that investors have kept consistent IBIT allocations over time.

As a result, IBIT has achieved a steady dollar-cost average into BTC, which has led to lower unrealized profits compared to BTCO, the fund managed by Invesco-Galaxy.

In contrast, BTCO received two-thirds of its year-to-date inflows in just four days (16–19 January), as bitcoin struggled between $41,600 and $43,100 after dropping more than 15% in the days after the launch of ETFs.

Bitcoin ETFs market performance

BTC broke away from $40,000 for the first time in over a month, triggering another inflow of funds two days later. Since then, Bitcoin has risen by about 33%, pushing BTCO and its shareholders as far into the positive as possible.

Some of those investors seem to have gone even further by cashing out their profits, making BTCO the only bitcoin ETF since launch to register outflows, excluding GBTC.

Blackrock bitcoin etf approval date

According to some experts, the BlackRock Bitcoin ETF and other spot Bitcoin ETFs have a high chance of being approved by the U.S. Securities and Exchange Commission (SEC) in early 2024. The most likely window for approval is between January 5th and January 10th, 2024. BlackRock filed for its iShares Bitcoin Trust on June 16, 2023, and the SEC has until March 15, 2024, to make a final decision on its application. A spot Bitcoin ETF would allow investors to buy and sell Bitcoin directly through a regulated exchange, without the need for intermediaries or custody services. This could boost the demand and adoption of Bitcoin, as well as its price.

Some additional information that you might find interesting are:

• BlackRock is the world’s largest asset management firm, with over $8.5 trillion in assets under management.

• The SEC has rejected several Bitcoin ETF proposals in the past, citing concerns over market manipulation, fraud, and investor protection.

• The first Bitcoin ETF was launched in Canada in February 2021, followed by several others in different countries.

How Bitcoin Funds and ETFs Performed in February 2024

Bitcoin, the world’s most popular cryptocurrency, reached a new all-time high of over $50,000 in February 2024, attracting more investors and traders to the market. However, not all bitcoin-related products performed equally well during this period. In this article, we will compare the performance of some of the leading bitcoin funds and ETFs in February 2024.

Invesco-Galaxy Bitcoin Fund

The Invesco-Galaxy Bitcoin Fund (IGBF) is a closed-end fund that invests in bitcoin and offers exposure to the price movements of the cryptocurrency. The fund is managed by Invesco and Galaxy Digital, two of the most prominent names in the crypto space.

In February 2024, IGBF saw a significant outflow of funds, as investors withdrew more than 1,500 BTC ($78.1 million) from the fund between February 9 and 14. This amounted to about 20% of the fund’s total assets at the time. The fund’s net asset value (NAV) also declined by 8.7% during the month, from $52.35 per share on February 1 to $47.79 per share on February 28.

The reason for the outflow could be that investors wanted to take advantage of the rising price of bitcoin, which increased from below $45,500 to $50,000 during the same period. By selling their shares in the fund, investors could access their bitcoin directly and sell them on the open market for a higher profit.

WisdomTree Bitcoin ETP

The WisdomTree Bitcoin ETP (BTCW) is an exchange-traded product that tracks the price of bitcoin and is backed by physical bitcoin held in cold storage. The ETP is listed on the Swiss Stock Exchange (SIX) and is regulated by the Swiss Financial Market Supervisory Authority (FINMA).

BTCW had a relatively stable performance in February 2024, with a slight increase in its NAV from $51.42 per share on February 1 to $51.98 per share on February 28. The ETP also saw a modest inflow of funds, as investors added 82 BTC ($4.3 million) to the product during the month.

However, most of the inflow occurred on the first day of trading, when the ETP launched on the SIX. Since then, the ETP has seen little trading activity and has lagged behind the market in terms of returns. The ETP’s market price was also lower than its NAV, indicating a lack of demand or liquidity for the product.

Grayscale Bitcoin Trust

The Grayscale Bitcoin Trust (GBTC) is the largest and most well-known bitcoin fund in the world. The trust holds bitcoin on behalf of its investors and issues shares that trade on the over-the-counter (OTC) market. The trust is sponsored by Grayscale Investments, a leading digital asset management firm.

GBTC had a dismal performance in February 2024, as it suffered a massive outflow of funds and a steep discount to its NAV. The trust lost nearly 2,400 BTC ($124.9 million) on average per trading day, as investors redeemed their shares in the trust. The total value of the bitcoin withdrawn from GBTC since January 11 was $6.86 billion at the time of the withdrawals.

The trust’s NAV also dropped by 13.4% during the month, from $54.63 per share on February 1 to $47.26 per share on February 28. However, the trust’s market price was even lower, trading at a 15.5% discount to its NAV on February 28. This means that investors who bought the trust’s shares on the market paid less than the value of the underlying bitcoin.

The reason for the outflow and the discount could be that investors were dissatisfied with the trust’s high fees, lack of liquidity, and regulatory uncertainty. The trust charges a 2% annual fee, which erodes the returns of the investors over time. The trust also trades on the OTC market, which has lower volume and transparency than the regular exchanges. Moreover, the trust is not registered with the Securities and Exchange Commission (SEC), which limits its access to institutional and retail investors.

Bitcoin ETF

The Bitcoin ETF (ETF) is a new product that was launched on February 15, 2024, by Binance, the world’s largest cryptocurrency exchange. The ETF is an exchange-traded fund that tracks the price of bitcoin and is backed by physical bitcoin held by Binance. The ETF is listed on the Binance Smart Chain (BSC), a blockchain platform that supports smart contracts and decentralized applications.

The ETF had a disappointing debut, as it failed to attract much interest or capital from the market. The ETF’s NAV was $0.000633 per share on February 28, which was 31.3% lower than its initial price of $0.000921 per share on February 15. The ETF also had a zero market capitalization and a negligible trading volume of $35,629.73 during the month.

The reason for the poor performance could be that the ETF was too new and untested for the market. The ETF was the first of its kind to be launched on the BSC, which is a relatively new and unproven platform. The ETF also faced competition from other established and regulated bitcoin products, such as the ones mentioned above. Moreover, the ETF was not available to investors in the US, Europe, and other major markets, due to legal and regulatory restrictions.

Conclusion

In conclusion, we can see that the performance of bitcoin funds and ETFs in February 2024 varied widely, depending on their features, fees, liquidity, and regulation. While some products saw inflows and gains, others saw outflows and losses. Investors who wanted to gain exposure to the price of bitcoin had to weigh the pros and cons of each product and choose the one that suited their needs and preferences.