BlackRock’s US$20b ETF is now the world’s largest Bitcoin fund

Tan KW

Publish date: Wed, 29 May 2024, 10:09 PM

BlackRock Inc’s iShares Bitcoin Trust has become the world’s largest fund for the original cryptocurrency, amassing almost US$20 billion in total assets since listing in the US at the start of the year.

The exchange-traded fund (ETF) held US$19.68 billion of the token on Tuesday (May 28), dethroning the US$19.65 billion Grayscale Bitcoin Trust, data compiled by Bloomberg show. The third largest is the US$11.1 billion offering from Fidelity Investments.

The BlackRock and Fidelity Bitcoin ETFs were among nine that debuted Jan 11, the same day the more than decade-old Grayscale vehicle converted into an ETF. The launches were a watershed for crypto, making Bitcoin more accessible to investors and spurring a rally in the token to a record US$73,798 by March.

The iShares Bitcoin Trust has attracted the greatest inflow since going live, US$16.5 billion, while investors have pulled US$17.7 billion from the Grayscale fund over the same period. The latter’s higher fees and exits by arbitragers have been cited as possible drivers of outflows.

Neither BlackRock nor Grayscale Investments LLC immediately replied to requests for comment outside regular US business hours. Grayscale intends to launch a clone of its main fund, according to a March regulatory filing, and fees are expected to be lower, a person familiar with the matter said at the time.

The Securities and Exchange Commission (SEC) reluctantly gave the green light for the first US spot-Bitcoin ETFs in January, following a court reversal in 2023 in a case brought by Grayscale.

The firm created the Grayscale Bitcoin Trust in 2013 and it became well-known as the biggest such vehicle. But shares in the closed-ended product sometimes traded at substantial premiums or discounts to its net asset value, prompting Grayscale to push for a conversion into an ETF to ensure trading at par.

SEC pivot

Last week, the SEC surprisingly pivoted towards allowing ETFs for Ether, a token that ranks second only to Bitcoin in market value. The agency, under chair Gary Gensler, is skeptical of the crypto industry overall, following a spate of scandals.

The group of Bitcoin funds - with assets of US$58.5 billion to date - have been hailed as one of the most successful new ETF categories. But critics argue volatile digital assets are ill-suited to widespread adoption, even within ETFs.

Some nations, such as Singapore and China, either curb or ban investor access. In the US, a Vanguard Group spokesperson said in January that the firm has no plans to offer any crypto-related products. BlackRock and Vanguard are the world’s two largest asset managers.

Bitcoin has quadrupled since the start of last year, helped by the ETFs, in a powerful recovery from a deep bear market in 2022. The token rose about 1% to US$68,797 as of 12:48 p.m. on Wednesday in Singapore.

- Bloomberg

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