BlackRock Bitcoin ETF Assets Under Management Reach $2 Billion for the First Time

On Saturday (Jan. 27), the BlackRock iShares Bitcoin ETF (IBIT) became the first of the recently launched spot Bitcoin products to reach $2 billion in assets under management (AUM). This does not include Grayscale’s GBTC, which had nearly $30 billion in AUM when it converted from a closed-end fund to a spot ETF.

On Thursday, investors added about $170 million to IBIT, with the fund buying nearly 4,300 more bitcoins (BTC), bringing the total number of tokens held to 49,952. With bitcoin prices rising to well above $40,000 early Friday, assets under management (AUM) have surpassed $2 billion.

Nate Geraci, president of ETF Store, said the fund currently has more than $2 billion in assets under management and ranks third in terms of assets collected among the more than 600 ETFs launched last year, and he believes IBIT will soon take over the top spot.

The next fund to break the $2 billion mark is likely to be Fidelity’s Wise Origin Bitcoin Fund (FBTC), which held just under 44,000 bitcoins as of January 25.

The early dominance illustrates the strength of the two asset management giants' marketing and distribution channels, which may help to incorporate products into institutional and retail portfolios. Despite the Bitcoin plunge after the launch, which caused double-digit losses for both IBIT and FBTC, the inflows have continued. Their distribution strength, coupled with investors' potential dislike for smaller issuers, puts the two companies far ahead in the field.

“BlackRock and Fidelity have liquidity and brand recognition that some other issuers don’t have, especially with retail investors who may be hesitant to invest in emerging asset classes,” said Roxanna Islam, an analyst at the ETF Data and Research Center.

“It’s still early in the race, but I think the gap between BlackRock and Fidelity and other issuers will only widen as issuance and assets grow,” said analyst firm VettaFi.

While it’s a crowded field, Nate Geraci said the strong performance shows there’s still plenty of room for growth in the spot bitcoin ETF space.

“Reaching $500 million is no small feat for an ETF in any asset class, let alone one with $2 billion in assets under management,” said Nate Geraci. “To achieve this in a novel asset class less than two weeks after launch is extremely impressive.”

So far, all spot Bitcoin ETFs that began trading this month have seen net inflows, with the exception of the Grayscale Bitcoin Trust (GBTC). While GBTC is by far the world’s largest cryptocurrency fund with $22 billion in assets, it has lost about $4 billion since converting to an ETF.

GBTC has an industry-high fee of 1.5%, which is lower than the 2% fee before the conversion, but still higher than its closest competitors. Franklin Templeton's fund has an expense ratio of 0.19% after the waiver, the lowest among spot Bitcoin ETFs, while BlackRock and Fidelity are close behind with final fees of 0.25% after the waiver period.

Anthony Scaramucci, an analyst at SkyBridge Capital, said that in the long run, companies like BlackRock and Fidelity will likely remain at the top. "BlackRock and Fidelity are going to be the two dominant names. They have the largest sales forces. The center of gravity of financial services is assets, and assets are the two largest players in the ETF space. So I think they're going to be the two winners."