BlackRock's Bitcoin (BTC) The exchange-traded fund (ETF) has reached a major milestone by surpassing $2 billion in assets under management (AUM) just two weeks after its launch on the Nasdaq.
The ETF, known as iShares Bitcoin Trust (IBIT), has seen its market capitalization reach 2.11 billion dollars due to the recent performance of the Bitcoin price.
The price of Bitcoin surpassed the $42,000 mark for the first time in almost seven days, following a sell-off that occurred following the launch of the ETFs on January 11.
The cryptocurrency's strong intraday performance has contributed to the rapid growth of BlackRock's IBIT, solidifying its position as a leader in attracting investor capital.
If he #Bitcoin the price has pushed $GOIts assets exceed $2 billion. This, plus today's likely new flows, should mean it will be above $2 billion at the close. https://t.co/IgOmEYB3qw pic.twitter.com/qFDZsvylo9
-James Seyffart (@JSeyff) January 26, 2024
Fidelity's Wise Origin Bitcoin Fund (FBTC) is currently lagging with $1.8 billion in inflows in the last 10 days.
BlackRock, as the world's largest asset manager, is leveraging its reputation in the market to attract a broader audience with its cryptocurrency-based product.
While other asset managers like VanEck targeted early adopters and the crypto community through television ads promoting their Bitcoin ETFs, BlackRock took a different approach.
The company released a two-minute video in which one of its executives explains Bitcoin's value proposition and how investors can gain exposure to its ETF, aimed specifically at baby boomers.
Annual Fees to Determine Spot ETF Race Winner
The annual fees charged by ETF issuers also influence attracting capital.
BlackRock set its fee for the iShares ETF at 0.12% for the first 12 months or up to the first $5 billion in assets under management, after which it plans to increase it to 0.25%.
Other issuers, such as ARK Invest, charge 0.21%, VanEck charges a 0.25% fee, and Bitwise charges 0.20%.
These fees are deducted from the ETF's performance rather than billed directly to investors, reducing overall investor returns.
Likewise, Aurelie Barthere, senior research analyst at Nansen, said in a recent interview with Cryptonews.com which expects ETFs with lower fees to attract more inflows in the near term.
The competitive landscape among Bitcoin spot ETF providers, according to Barthere, will be determined by factors such as reputation, size, existing footprint, and management fees.
โReputation, size, existing footprint and management fees will likely lead to a few leaders dominating the market,โ he predicted.
JPMorgan analysts have also predicted that the success of these newly created ETFs will depend on fees and liquidity.
Given the high 1.5% fees associated with GBTC, expect significant outflows from this Bitcoin trust.
Meanwhile, Bloomberg analyst James Seyffart expects Bitcoin ETFs to attract $10 billion in capital in the first year.
The rapid growth of BlackRock's IBIT demonstrates the growing demand for cryptocurrency investment products and suggests that broader adoption of Bitcoin by traditional financial institutions is underway.
As more investors seek exposure to the cryptocurrency market, ETFs provide them with a convenient and regulated avenue to participate in the potential upside of cryptocurrencies like Bitcoin.
