TL;DR
- BlackRock’s iShares Bitcoin Trust (IBIT) has become the largest Bitcoin fund globally, surpassing Grayscale’s Bitcoin Trust with nearly $20 billion in assets.
- IBIT experienced the highest inflows of any Bitcoin fund since its launch, while Grayscale’s fund saw significant outflows, leading to BlackRock’s current dominance.
- The SEC’s approval of spot Bitcoin ETFs and the recent green light for spot Ether ETFs reflect a growing acceptance of cryptocurrency funds in the mainstream investment market.
BlackRock’s iShares Bitcoin Trust (IBIT) has emerged as the world’s largest Bitcoin fund. The fund has amassed nearly $20 billion in total assets since its United States listing earlier this year, overtaking the long-standing leader, Grayscale Bitcoin Trust (GBTC).
Data from HODL15Capital reveals that as of Tuesday, IBIT held a staggering $19.68 billion worth of Bitcoin, edging out GBTC’s $19.65 billion. Fidelity Investments trails behind, securing the third-largest spot with an $11.1 billion offering.
The introduction of BlackRock’s Bitcoin ETF, along with Fidelity’s, was part of a suite of nine funds that launched on January 11, coinciding with Grayscale’s transition into an ETF.
This move marked a watershed moment for the crypto industry, as the approval of spot Bitcoin ETFs made Bitcoin more accessible to investors and contributed to a rally that propelled the leading cryptocurrency to a record high of $73,798 by March.
Inflows and Outflows: A Tale of Two Funds
Since its inception, IBIT has seen the highest inflow, totaling $16.5 billion, while GBTC experienced withdrawals amounting to $17.7 billion during the same period.
Factors such as higher fees and exits by arbitragers may have contributed to the outflows from Grayscale. In response, Grayscale has signaled its intention to launch a clone of its main fund with lower fees, as indicated in a March regulatory filing.
Regulatory Milestones and Market Dynamics
The SEC approved the first U.S. spot-Bitcoin ETFs in January following a court reversal in 2023, a case initiated by Grayscale. Grayscale’s push for conversion into an ETF aimed to align trading with its net asset value, a significant departure from the often substantial deviations seen with the closed-ended product.
The Success and Scrutiny of Bitcoin ETFs
The group of Bitcoin funds, now boasting $58.5 billion in assets, has been lauded as one of the most successful new categories of ETFs.
However, the volatile nature of digital assets has drawn criticism, with skeptics questioning their suitability for widespread adoption, even within the structured framework of ETFs. Some nations, like Singapore and China, have imposed restrictions or outright bans on investor access to cryptocurrencies.
The Future of Crypto ETFs
Despite the controversies, Bitcoin’s value has seen a fourfold increase since last year, partly fueled by the advent of ETFs. The SEC’s recent openness to Ether ETFs further underscores the regulatory body’s evolving stance on cryptocurrency funds.
On May 23, the SEC greenlit 19b-4 applications from major players like VanEck, BlackRock, Fidelity, and Grayscale for issuing spot Ether ETFs.
BlackRock’s Ascendancy
As of May 28, IBIT recorded inflows of $103 million, while GBTC saw outflows of $105 million. BlackRock now boasts 288,670 BTC in its IBIT ETF, surpassing Grayscale’s GBTC, which holds 287,450 BTC. This ‘flippening’ of GBTC by IBIT underscores BlackRock’s growing dominance in the Bitcoin ETF market, a trend that is reshaping the landscape of cryptocurrency investment.
