(Bloomberg) — BlackRock Inc.’s iShares unit is offering… Over 1,400 exchange-traded funds exist around the world, yet none have performed quite like this.
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iShares Bitcoin Trust (Ebit) broke industry records in its launch year of 2024. In just 11 months, it has grown into a giant with assets of more than $50 billion. Simply put, no ETF has ever seen a better start.
Todd Sohn, managing director of ETF and technical strategy at Strategas Securities, noted that IBIT size has swelled to the equivalent of the combined assets under management of more than 50 European market-focused ETFs, many of which have been around for more than two decades. In a note. Nate Geraci, president of consulting firm The ETF Store, called it “the greatest launch in ETF history.”
As James Seyphart, a Bloomberg Intelligence analyst, said: “IBIT’s growth is unprecedented. It’s the fastest ETF to achieve the most milestones, faster than any other ETF in any asset class.” At a current asset level and expense ratio of 0.25%, he added , IBIT can expect to earn about $112 million annually.
However, IBIT’s success has been about more than just generating big numbers for BlackRock. It proved to be a turning point for Bitcoin itself.
With BlackRock having more than $11 trillion in assets under management, the embrace of the world’s largest investment firm has helped push Bitcoin’s price above $100,000 for the first time, bringing previously skeptical institutional and retail investors into the fold.
The road to a spot bitcoin ETF in the US has been long and difficult. In 2013, the Winklevoss twins were the first to try it. They applied for an ETF when bitcoin was trading just under $100. However, this application faced rejection by the US Securities and Exchange Commission, as have many others over the years.
However, digital asset company Grayscale Investments refused to take “no” for an answer, and fought the SEC in court. It finally scored a key victory over the regulator in 2023 when a federal appeals court overturned the denial of its request to convert a bitcoin trust into an ETF.
Around the same time, the investment industry’s elephant entered the room: BlackRock. Larry Fink, the company’s CEO, once criticized Bitcoin as a tool for global money laundering. But like many others before him in traditional finance, his view changed and he began to view Bitcoin as “digital gold.”
Known for its impeccable track record in introducing and launching ETFs, BlackRock’s entry into the Bitcoin Spot competition was taken as a sign that approval was inevitable. Then, once it got the green light in January, BlackRock, along with Fidelity, VanEck, Grayscale and others, successfully launched the first US group of ETFs that invest directly in Bitcoin. The group of 12 funds now has combined assets worth about $107 billion.
BlackRock also gained an advantage when the SEC moved away from its long-standing “first come, first served” process, some industry participants said. “By deviating from this established practice, the SEC has undermined first-mover advantage, creating an unlevel playing field for issuers,” said Matthew Siegel, head of digital asset research at Van Eck. Early applicants faced lengthy compliance hurdles and higher legal and operational costs, while later entrants benefited “from a fast but opaque process,” he said.
“If every ETF issuer has to wait for BlackRock to take the lead, we risk losing out on innovation and consumer choice,” Siegel added.
Among the crowded field of spot Bitcoin ETFs, IBIT stands out. It reached more than $50 billion five times faster than the second-fastest exchange-traded fund, BlackRock’s iShares Core MSCI EAFE ETF, which took nearly four years to reach the milestone, according to Bloomberg Intelligence analyst Eric Balchunas.
IBIT now has more assets than BlackRock’s gold ETF, the world’s second-largest gold ETF, even as that fund also saw strong demand this year. Investors pumped a net $37 billion, the third-strongest inflow into the fund this year.
Geraci believes IBIT in 2025 could surpass SPDR Gold Shares, the largest gold ETF, barring a Bitcoin price collapse.
IBIT and other Bitcoin ETFs have also played a big role in Bitcoin’s 118% year-to-date surge in prices. Since its launch, IBIT has seen only nine days of outflows and represents on average more than 50% of daily trading volume among the group.
The iShares Fund was also the first fund to have options tied to it. Since their launch on November 19, these contracts have become among the most actively traded contracts tracking ETFs, with an average daily notional volume of about $1.7 billion.
“Consistent with the tendency of the ETF options market to concentrate activity in a few underlying assets, each of the following most active Bitcoin spot options underlyings (Fidelity and Grayscale funds) averaged approximately 1% of daily volume of IBIT,” according to the memo. From research company Asym500. “Although there are thousands of ETFs in the United States, and more than a thousand with listed options, creating liquidity for options at the institutional level has proven extremely difficult. Only 13 ETFs have averaged more than $1 billion in notional volume.” Daily for the past three months.
While BlackRock has moved forward with its crypto asset-related products, its main competitor Vanguard has remained on the sidelines. It has chosen not to offer a spot bitcoin ETF or even allow trading in it through its brokerage.
“There is a subset of investors who believe strongly in a diversified mix of low-cost stock and bond funds — like Vanguard’s — with a small portion allocated to cryptocurrencies,” Geraci said. He added that Vanguard risks alienating younger investors who view cryptocurrencies as standard portfolio assets, allowing its biggest rival to position itself as a “more advanced and innovative asset manager.”
Representatives for BlackRock and Vanguard declined to comment.
