BlackRock’s US$20-billion ETF is now the world’s largest bitcoin fund, dethroning Grayscale’s rival crypto trust

BlackRock’s spot bitcoin exchange-traded fund held US$19.68 billion in total assets as of Tuesday
The firm’s iShares Bitcoin Trust has attracted the greatest inflow, totalling US$16.5 billion, since nine crypto ETFs debuted in the US in January

Bitcoin

Bloomberg

Published: 4:47pm, 29 May 2024

Why you can trust SCMP

BlackRock’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 United States at the start of the year.

The spot bitcoin exchange-traded fund (ETF) held US$19.68 billion of the token on Tuesday, 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 spot bitcoin ETFs were among nine that debuted on January 11, the same day the more than decade-old Grayscale vehicle converted into an ETF. The launches were a watershed for cryptocurrencies, 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, totalling US$16.5 billion, since going live in January, while investors have pulled US$17.7 billion from the Grayscale fund over the same period. The latter’s higher fees and exits by arbitrageurs have been cited as possible drivers of outflows.

Samara Cohen (centre), chief investment officer of exchange-traded funds and index investments at BlackRock, rings the opening bell at the Nasdaq Exchange, as the United States’ first spot bitcoin ETFs were launched in New York City on January 11, 2024. Photo: Getty Images via AFP

Neither BlackRock nor Grayscale Investments 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.

The facade of the US Securities and Exchange Commission’s headquarters in Washington, DC. Photo: Bloomberg

Last week, the SEC surprisingly pivoted toward allowing ETFs for ether, a token that ranks second only to bitcoin in market value. The US agency, under Chairman Gary Gensler, is sceptical 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 spokesman 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 in value 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 per cent to US$68,797 as of 12:48pm on Wednesday in Singapore.

Post