Key Takeaways:
Wall Street investment giant BlackRock’s exchange-traded fund (ETF), iShares Bitcoin Trust (IBIT), has become the world’s largest fund backed by Bitcoin (BTC) with $20 billion in total assets amassed since it began trading in the US in January.
BlackRock’s IBIT Now Holds Over $20 Billion Worth of Bitcoin, Leapfrogging Grayscale’s GBTC
As of Tuesday, May 28th, IBIT held 288,670 Bitcoins valued at over $20 billion, surpassing digital asset manager Grayscale’s spot Bitcoin ETF, Grayscale Bitcoin Trust (GBTC), which has 287,450 BTC worth $19.7 billion in assets under management (AUM).
Fidelity Wise Origin ETF (FBTC) by Fidelity Investments came in third place with $11 billion in AUM.
Both funds were launched on the same day in January amid a wave spot of Bitcoin ETFs that the Securities and Exchange Commission (SEC) greenlit.
For years, GBTC was the world’s largest Bitcoin fund, with its AUM peaking at about $44 billion in November 2021, when Bitcoin reached its previous all-time high of nearly $70,000 per token.
Grayscale Suffered Massive $18 Billion Outflow Since January While BlackRock Boomed
The fund was still the leader when the nine spot Bitcoin ETFs were listed for trade in US markets, holding about $29 billion in BTC. However, investors began moving their funds from GBTC into other ETFs, such as IBIT and FBTC due to their comparatively lower fees and wider accessibility.
According to reports, nearly $18 billion has been pulled from Grayscale’s Bitcoin fund since it was converted to an ETF at the start of the year. In the meantime, spot Bitcoin ETFs launched by BlackRock and Fidelity have raked in over $30 billion.
While GBTC bled funds, IBIT saw steady inflows that have now placed it on the top of the list.
On the day BlackRock dethroned Grayscale, GBTC saw $105 million exit the fund while IBIT gained over $100 million. iShares Bitcoin Trust’s rapid ascend to a $20 billion valuation also makes it one of the fastest-growing exchange-traded funds in history.
The SEC, led by long-term crypto skeptic and former banker Gary Gensler, rejected spot Bitcoin ETF applications for more than a decade, citing fears of market manipulation and fraud. However, the regulator was forced to approve the funds after Grayscale won a court challenge last year related to denying the conversion of GBTC into an ETF without specifying an adequate reason.
Unfortunately, Grayscale was powerless from being able to stop the outflow of funds once its ETF began trading. From the outset, GBTC faced heavy selling pressure, largely due to its 1.5% commission fee, which is notably higher than the average of about 0.25% charged by firms including BlackRock, Fidelity, and ARK Investments for their respective ETFs.
IBIT Benefits From BlackRock’s Plethora of Global Clients
Experts believe that IBIT and FBTC benefitted from its strong distribution network among independent financial advisors and wealth managers.
Furthermore, BlackRock is adding IBIT to its Strategic Income and Strategic Global Bond funds this week, further validating institutional demand. These funds holding various securities, including Uniform MBS and U.S. Treasury bonds, cater to investors looking for income opportunities and diversification in the global bond market.
The company now holds shares of its iShares Bitcoin Trust across several major investment funds.
BlackRock’s leap forward to become the issuer of the world’s largest Bitcoin ETF is an indication of the growing acceptance Bitcoin is receiving from legacy finance. The old guard of the finance world is increasingly seeing value in offering their clients access to crypto assets.
JPMorgan Chase and Wells Fargo recently disclosed to the SEC that they have exposure to spot Bitcoin ETFs. The American banking giants have investments in IBIT, GBTC, FBTC, Bitwise Bitcoin ETF (BITB), and Proshares’ Bitcoin Strategy ETF (BITO).
Over 240 companies have reported investments in the iShares Bitcoin Trust ETF, while 467 institutional investors declared exposure to the Grayscale Bitcoin Trust ETF.
SEC Expected to Approve Spot Ethereum ETFs From BlackRock and Grayscale by July
Both BlackRock and Grayscale are also in the race to launch a spot in Ethereum ETF. BlackRock submitted a Form S-1 with the SEC this week for its iShares Ethereum Trust ETF while Grayscale is looking to convert its Grayscale Ethereum Trust (ETHE) into an exchange-traded fund.
Last week, the securities watchdog asked exchanges including the Nasdaq, CBOE, and NYSE to submit details of issuers who are preparing to list ETFs backed by the world’s second-largest cryptocurrency by market capitalization. The agency has seemingly approved spot Ethereum ETF proposals from eight companies: BlackRock, Fidelity, Grayscale, VanEck, ARK Invest, Invesco, Hashdex, and Franklin Templeton.
Bloomberg ETF analyst Eric Balchunas expects the funds to begin trading by the end of June or early July.
At the time of writing, Bitcoin (BTC) is trading at $68,364 – down 0.47% over the last 24 hours. Ethereum (ETH) is changing hands at $3,745 – down 0.95% in the same period.
More News: Possibility Of Ethereum ETF Launch Solidifies Following BlackRock’s Updated S-1 Filing
