Stay informed with free updates
Simply subscribe to myFT Digest for ETFs – delivered straight to your inbox.
BlackRock's Bitcoin ETF has reached $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.
BlackRock's iShares Bitcoin Trust (IBIT) needed less than two months from its Jan. 11 launch to reach the milestone, surpassing Invesco QQQ's record of just over a year, according to Morningstar. IBIT's total assets now stand at about $12.7 billion, a combination of Bitcoin's appreciation and more than $7 billion in net inflows.
IBIT and the nine other Bitcoin ETFs that the SEC gave the green light on January 11, were supported by a rally that sent the price of Bitcoin past $70,000 on Friday, hitting a new high before settling at around $68,500 as of From Friday. afternoon.
The 10 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 pulled from the $27.5 billion Grayscale Bitcoin Trust ETF (GBTC), according to data from Morningstar. Direct. The Fidelity Wise Origin Bitcoin ETF has amassed about $7.6 billion in assets, making it the second-fastest fund to reach $10 billion after its counterpart iShares.
Much of the recent investment in bitcoin ETFs appears to be coming from investors “trapped inside GBTC” who have exited the most expensive bitcoin ETFs in favor of a less expensive alternative, said Dave Nadig, a longtime ETF watcher who has been studying ETFs. In Bitcoin. Trading patterns.
Much of the heavy trading volume in bitcoin ETFs in recent weeks has been the result of high-frequency traders, Nadig said. “They are just players trying to scalp you.”
While high-frequency traders and hedge funds have become increasingly interested in Bitcoin ETFs and their arbitrage potential, the bulk of the new assets moving BlackRock's new cryptocurrency products appear to be coming from retail investors.
“The buyers of these are primarily individual investors looking to access cryptocurrencies through tax-advantaged retirement accounts and brokerage accounts,” said Zach Bandel, director of research at Grayscale.
GBTC has had a head start on Bitcoin ETF assets since its launch more than a decade ago, in a structure that made it difficult for investors to exit easily. But investors have left the fund and its 1.5 per cent management fee now that they can more efficiently shift their holdings to less expensive alternatives, some of which have waived their fees entirely.
“We are very proud of GBTC and what it means for the industry, and we intend to make it a competitive product over time,” Bandel said.
The rally that followed the SEC's long-awaited immediate approval of the Bitcoin ETF has been so positive that the net assets of Grayscale's ETF have nearly recovered since its conversion, allowing long-term holders to exit and profit from Bitcoin's meteoric rise over the past decade.
Recent launches from JPMorgan and State Street Global Advisors have all reached the $10 billion threshold in about two years, according to Morningstar. State Street's SPDR Gold Shares ETF (GLD), which launched in late 2004, was also relatively quick to reach $10 billion, surpassing that mark in early 2007.
“I had high expectations, and they were largely exceeded,” said James Seyphart, a research analyst at Bloomberg Intelligence. “Demand is being pushed forward much faster.”
Bitcoin has become safer since the launch of ETFs in January, Seyphart said. “The likelihood of this going to zero is much less, especially after the SEC approved these ETFs, which removes some of the downside risk,” he said.
Bitcoin ETFs from iShares, Fidelity and Cathie Wood's Ark Investment Management have accounted for the most new money since their launch, while similar products from Wisdom Tree, Valkyrie and Franklin Templeton have been less successful, according to data from Morningstar Direct.
Although WisdomTree's $58 million Bitcoin ETF hasn't had as much luck accumulating assets as most of its peers, “it's actually been one of our most successful ETFs, even though we don't receive the iShares level of volume,” he said. As Will Beck said. , Head of Digital Assets at WisdomTree.
“It helps that Bitcoin has been on a tear since its launch,” Beck said. “I was expecting it to be a sort of ‘buy the rumour, sell the news’ situation, but it shows how difficult it is to know anything about this asset class.”
