Key Takeaways
- IBIT is the ticker of the BlackRock Spot Bitcoin ETF, one of the first Bitcoin ETFs approved in 2024.
- The ETF tracks the price of Bitcoin, offering investors exposure to BTC without directly buying and holding it.
- BlackRock’s IBIT ETF is the largest Bitcoin Spot ETF and one of the largest Bitcoin holders globally.
- The IBIT ETF’s success has attracted institutional and individual investors, making it a key player in the future of Bitcoin.
In January 2024, cryptocurrency saw a monumental shift into the mainstream space with the approval of Spot Bitcoin ETFs. This move gave institutional investors an easier way to gain exposure to Bitcoin without having to manage the asset directly, making BTC more accessible to everyday users.
Among the first 11 to be approved was a BlackRock ETF, which led to the creation of the iShares Bitcoin Trust (IBIT). It quickly gained traction and established itself as a leader in the space. In this article, we’ll explore what a Bitcoin ETF is, what made IBIT so important, and how it works.
What is a Spot Bitcoin ETF anyway?
A Spot Bitcoin ETF is an exchange-traded fund that tracks the price of Bitcoin in real time. Unlike Bitcoin futures ETFs, which are based on the price of Bitcoin futures contracts, a Spot Bitcoin ETF directly tracks the current price of Bitcoin by holding the asset itself.
Investors buy shares in the ETF, which gives them exposure to Bitcoin without needing to hold or manage the cryptocurrency themselves.
The significance of Spot Bitcoin ETFs lies in their ability to bring more traditional investors into the cryptocurrency space. Furthermore, Bitcoin ETFs offer a regulated way to invest in Bitcoin through familiar financial products without having to deal with tokenomics.
What is IBIT, BlackRock spot Bitcoin ETF?
The iShares Bitcoin Trust (IBIT) is a Spot Bitcoin ETF owned and managed by BlackRock, the largest asset management company in the world. Listed on NASDAQ, IBIT gives investors a new way to access Bitcoin through a traditional financial product. The underlying asset is Bitcoin’s native currency BTC.
A Fund that Owns and Tracks BTC
IBIT operates by holding Bitcoin in a trust and issuing shares that represent ownership of the underlying Bitcoin. For example, the price of each IBIT share is tied to the current value of the Bitcoin held by the fund, allowing the ETF to track Bitcoin’s market performance.
As the price of Bitcoin fluctuates, so does the value of the IBIT shares, giving investors exposure to Bitcoin’s price movements without the need to manage the asset directly.
Who Custodies the BTC in IBIT ETF?
The IBIT ETF is managed by BlackRock, with Coinbase acting as the custodian of the Bitcoin held by the fund. As a result, this offers an additional layer of security since Coinbase is a trusted name in the cryptocurrency industry. The exchange stores the majority of user funds in FDIC-insured bank accounts and U.S. government money market.
One key advantage of the IBIT ETF is that it eliminates the traditional barriers to entry associated with the crypto space. In addition, the IBIT ETF provides a secure alternative for any investors who might be new to crypto, wary of managing their private keys, or dealing with the risks of digital wallets.
BTC vs IBIT Spot Bitcoin ETF
For investors deciding between buying Bitcoin directly and investing in the IBIT ETF, there are several key differences. The table below outlines some of the main factors that distinguish holding BTC from buying IBIT.
BTC |
IBIT Stock |
|
|---|---|---|
| Custody | Self custody | Managed by Blackrock/ Custody by Coinbase |
| Asset Owned | Bitcoin | Shares in the ETF |
| Regulation | Unregulated | Regulated by the SEC |
| Technical Knowledge | Requires wallet and key management | No technical knowledge needed |
| Fees | Transaction fees on exchanges | Management fees for the ETF |
How Much Bitcoin Is Held in the BlackRock IBIT ETF?
The Blackrock IBIT ETF holds more than 380 000 BTC. To put things into perspective, this is around 2% of the total Bitcoin supply. In fact, the only entities holding more Bitcoin are Coinbase, Binance, and Satoshi Nakamoto, the pseudonymous creator of Bitcoin.
This positions the ETF as a powerful player in the Bitcoin ecosystem, with its inflow and outflow reports often influencing the entire Bitcoin market.
How Many IBIT Shares Are There?
The IBIT ETF issues shares that represent a fractional ownership of the Bitcoin held by the trust. In other words, each IBIT share is worth a certain amount of Bitcoin, and the total number of IBIT shares depends on the amount of Bitcoin under the fund’s management.
As a result, each IBIT share represents a small fraction of Bitcoin, giving investors exposure to Bitcoin’s price movements without needing to buy a full coin. At the time of writing, one IBIT share stands at $38.30, representing approximately 0.058% of 1 BTC.
Performance of IBIT ETF
Since its launch, the IBIT ETF has performed exceptionally well. Less than two weeks after the fund’s opening, the assets under management jumped from $10 million to over $1 billion, demonstrating the strong demand for Bitcoin ETFs among institutional and retail investors.
The wider Bitcoin market also felt the effects of this raft of new ETFs. The month following their launch saw a huge surge in the price of Bitcoin, reaching a new ATH of $70,000 by March 2024.
The ETF’s value has continued to steadily grow as more investors seek regulated exposure to Bitcoin without the complexities of crypto. Moreover, today, the IBIT ETF manages over $26 billion in assets.
Who Holds IBIT Stock in Their Portfolio?
The IBIT ETF represents a diverse range of investors, from large institutional firms to individual traders seeking exposure to Bitcoin. At the same time, the fund’s success has made it a popular choice for those looking to diversify their portfolios with cryptocurrency.
IBIT Institutional
Institutional investors have played a major role in the growth of the IBIT ETF. Here are some of the top institutional holders of IBIT stock:
- Millennium Management LLC (10,876,442 shares): Millennium is a leading investment management firm offering a multistrategy hedge fund. As of August 2024, it is one of the largest alternative asset managers globally. It oversees more than $67.9 billion in assets.
- Capula Management LTD (7,419,208 shares): Capula is a British hedge fund and also the fourth largest in Europe. In addition, in 2024, it holds nearly $30 billion in assets under management.
- Goldman Sachs Group Inc (6,991,248 shares): Founded in 1869, Goldman Sachs is an American multinational investment bank and financial services company.
Individual Holders
In addition to institutional investors, several prominent individuals have also added IBIT stock to their portfolios. These include:
- Ken Griffin (63,186 shares): founder and manager of Citadel Advisors has a $494 billion portfolio, and recently acquired a position in IBIT.
- David Shaw (2.6 million shares): scientist and former hedge fund manager of D.E. Shaw & Company has a $107 billion portfolio.
- Israel Englander (10.8 million shares): the hedge fund manager and CEO of Millennium Management bought shares in the iShares Bitcoin Trust, comprising 0.2% of his $216 billion portfolio.
Development of Bitcoin ETFs
The rise of Bitcoin ETFs has been a long journey but fruitful journey marked by repeated rejections from the SEC. However, after years of lobbying and legal battles, Spot Bitcoin ETFs were finally approved in January 2024. The timeline below outlines the key milestones in the development of Bitcoin ETFs.
2013 – Winklevoss Twins Make the First ETF Application
The Winklevoss twins made the first ETF application in 2013 when BTC was trading at $90. It was rejected by the SEC due to concerns over market risks.
2018 – More SEC Rejections
In August 2018, the SEC simultaneously rejected a total of nine different Bitcoin ETFs.
2021 – BItcoin Futures ETFs Approved
Bitcoin futures ETFs were approved with the ProShares Bitcoin Strategy ETF (BITO). Consequently, this marked a major step forward and signaled the massive demand in the market as it gathered over $1 billion in assets in two days.
2024 – Spot Bitcoin ETFs Approved
Spot Bitcoin ETFs were approved in January, starting with the iShares Bitcoin Trust (IBIT). It quickly became the largest Bitcoin ETF in the world.
Closing Thoughts
In conclusion, the BlackRock IBIT ETF represents a significant shift in how investors can access Bitcoin. Furthermore, by providing a regulated, secure, and accessible way to invest in Bitcoin, the IBIT ETF has opened the doors for more institutional and retail investors to enter the cryptocurrency market.
