BlackRock's ETF becomes largest bitcoin fund in world

BlackRock's ETF becomes largest bitcoin fund in world

BlackRock's iShares Bitcoin Trust has become the world's largest fund for the world's largest cryptocurrency, racking up nearly $20 billion in total assets since listing in the U.S. in January, Bloomberg News reported on Wednesday.

The exchange-traded fund held $19.68 billion of token on Tuesday, overtaking Grayscale Bitcoin Trust's $19.65 billion, report said, citing data compiled by Bloomberg.

Reuters could not independently verify those numbers. Grayscale's product website cites its assets under management as being $19.75 billion. A spokesperson could not be reached for comment.

When the nine new ETFs launched in January, Grayscale's fund had about $29 billion in assets.

Market analysts have been keeping a keen eye on the relative flows into BlackRock's ETF and out of the Grayscale Bitcoin Trust since U.S. regulators approved the launch of nine new ETFs and the conversion of Grayscale's publicly-traded trust into an exchange-traded product on January 10.

The Securities and Exchange Commission, which is led by crypto skeptic Gary Gensler, had rejected spot bitcoin ETFs for more than a decade over market manipulation worries, but approved them in January after Grayscale Investments won a court challenge last year.

This has proved a short-lived victory for Grayscale, which has been hit by steady outflows since its newly converted ETF began trading January 11.

BlackRock's growing dominance of the ultra-competitive new spot bitcoin landscape "is a reminder that being the first mover doesn't necessarily mean that someone ends up as the biggest winner," said Aniket Ullal, head of ETF data and analytics at CFRA. Early incumbents can have legacy disadvantages, he noted.

From the outset, Grayscale battled headwinds ranging from selling pressure and a fee of 1.5%, notably higher than the average of about 0.25% charged by its new rivals, which also include firms like Fidelity Investments and ARK Investments.

Meanwhile, CFRA's Ullal noted that BlackRock has benefitted from its strong distribution network among independent financial advisors and wealth managers.

We're seeing significant assets moving into the ETF from the wealth community as well as from individual advisors, Jay Jacobs, U.S. head of thematic and active ETFs, told Reuters Tuesday ahead of the Bloomberg report.

"A lot of early movers went from direct ownership of digital assets to IBIT," Jacobs added. "Some of those accounts had millions of dollars invested in the cryptocurrency.

Although some hedge funds reported large positions in the new ETFs as of the end of the first quarter, other institutional investors have been slower to embrace the new bitcoin ETFs.

"We know that this is going to be the longest process," said Jacobs of those institutional buyers. "In some cases, it could take years.