(Bloomberg) — BlackRock Inc.’s iShares unit offers more than 1,400 exchange-traded funds around the world, yet none of them have performed quite like this.
The iShares Bitcoin Trust (IBIT) smashed industry records in its launch year of 2024. In just 11 months, it grew to a behemoth with more than $50 billion in assets. Simply put, no ETF has ever had a better debut.
IBIT’s size 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, Todd Sohn, managing director of ETF and technical strategy at Strategas Securities, pointed out in a note. Nate Geraci, president of advisory firm The ETF Store, called it “the greatest launch in ETF history.”
As Bloomberg Intelligence analyst James Seyffart put it: “IBIT’s growth is unprecedented. It’s the fastest ETF to reach most milestones, faster than any other ETF in any asset class,” he said. At the current asset level and an expense ratio of 0.25%, IBIT can expect to earn about $112 million a year, he added.
Yet IBIT’s success was about more than just racking up big numbers for BlackRock. It proved to be a turning point for Bitcoin itself.
With BlackRock’s more than $11 trillion in assets under management, the embrace by the world’s largest investment firm helped drive Bitcoin’s price past $100,000 for the first time, bringing both institutional investors and formerly skeptical individuals into the fold.
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Road to IBIT
The path to a spot-Bitcoin ETF in the US was a long and rocky one. In 2013, the Winklevoss twins were the first to try. They filed for an ETF when Bitcoin was trading just shy of $100. However, that application faced rejection by the US Securities and Exchange Commission, as did several others over the years.
Yet digital-asset firm Grayscale Investments refused to take no for an answer, and fought the SEC in court. Eventually, it won a key victory over the regulator in 2023 when a federal appeals court overturned the rejection of its application to convert a Bitcoin trust into an ETF.
Around the same time, an elephant of the investment industry entered the room: BlackRock. Larry Fink, the firm’s chief executive officer, had once criticized Bitcoin as a tool for global money laundering. But like many others before him in traditional finance, his view shifted and he began to see Bitcoin as “digital gold.”
Known for its flawless track record of filing and launching ETFs, BlackRock’s entrance into the spot-Bitcoin competition was taken as a sign that approval was inevitable. Then once given the green light in January, BlackRock, along with Fidelity, VanEck, Grayscale and others, successfully launched the first US cohort of ETFs that invest directly in Bitcoin. The group of 12 funds now collectively hold about $107 billion in assets.
Some industry participants said that BlackRock also gained an edge as the SEC departed from its long-standing “first come, first served” process. “By deviating from this established practice, the SEC undermined the first-mover advantage, creating an uneven playing field for issuers,” said Matthew Sigel, VanEck’s head of digital-asset research. Early filers faced prolonged compliance hurdles and higher legal and operational costs, he said, while later entrants “benefited from an expedited but opaque process.”
“If every ETF issuer must wait for BlackRock to take the lead, we risk losing innovation and consumer choice,” Sigel added.
Category Leader
Among a crowded field of spot-Bitcoin ETFs, IBIT stands out. It reached over $50 billion five-times quicker than the next fastest exchange-traded fund, BlackRock’s own iShares Core MSCI EAFE ETF, which took nearly four years to reach the milestone, according to Bloomberg Intelligence analyst Eric Balchunas.
IBIT now holds more assets than BlackRock’s gold ETF, the second-largest gold fund globally, even after that fund also saw strong demand this year. Investors poured in a net $37 billion, the third-strongest inflow to a fund this year.
Geraci believes IBIT in 2025 could surpass SPDR Gold Shares, the largest gold ETF, barring a collapse in the price of Bitcoin.
IBIT and the other Bitcoin ETFs also played an outsized role in Bitcoin’s 118% year-to-date price rally. Since launch, IBIT has seen only nine days of outflows and on average accounts for more than 50% of the daily trading volume among the group.
Competitive Edge
The iShares fund was also the first to have options tied to it. And since their Nov. 19 launch, those have become among the most-traded contracts tracking ETFs, averaging about $1.7 billion in daily notional volume.
“Consistent with the ETF option market’s tendency to concentrate activity in a few underlyings, the next-most-active spot-Bitcoin option underlyings (Fidelity’s and Grayscale’s funds) have each averaged roughly 1% of the IBIT’s daily volume,” according to a note from research firm Asym500. “Even though there are thousands of ETFs in the US, and over a thousand with listed options, establishing institutional-level option liquidity has proven quite difficult. Only 13 ETFs have averaged over $1 billion in notional volume per day over the past 3 months.”
While BlackRock has surged forward with products tied to cryptoassets, its main rival Vanguard has remained on the sidelines. It chose not to offer a spot-Bitcoin ETF or even allow trading in them through its brokerage.
“There is a subset of investors who strongly believe in a diversified mix of low-cost stock and bond funds – such as Vanguard’s – while allocating a small portion to crypto,” Geraci said. Vanguard risks alienating younger investors who view crypto as a standard portfolio asset, allowing its biggest competitor to position itself as a “more forward-thinking, innovative asset manager,” he added.
Representatives for BlackRock and Vanguard declined to comment.
