BlackRock Inc.’s iShares Bitcoin Trust has emerged as the world’s largest fund dedicated to the original cryptocurrency, amassing nearly $20 billion in total assets since its US listing at the beginning of the year.
As of Tuesday, the exchange-traded fund (ETF) held $19.68 billion in Bitcoin, surpassing the $19.65 billion held by the Grayscale Bitcoin Trust, according to data compiled by Bloomberg. The third-largest Bitcoin fund is Fidelity Investments’ offering, which holds $11.1 billion.
The launch of the BlackRock and Fidelity Bitcoin ETFs on January 11 marked a significant milestone for the cryptocurrency market. On the same day, the decade-old Grayscale Bitcoin Trust converted into an ETF. These events made Bitcoin more accessible to investors and contributed to a rally, pushing the token to a record high of $73,798 by March.
Since its inception, the iShares Bitcoin Trust has attracted the most substantial inflows, amounting to $16.5 billion. In contrast, the Grayscale Bitcoin Trust has seen outflows of $17.7 billion during the same period. Analysts suggest that Grayscale’s higher fees and exits by arbitragers might be driving these outflows.
Neither BlackRock nor Grayscale Investments LLC responded to requests for comment outside regular US business hours. However, Grayscale has plans to launch a clone of its main fund with lower fees, as indicated in a March regulatory filing.
The Securities and Exchange Commission (SEC) approved the first US spot Bitcoin ETFs in January, following a court reversal in 2023 in a case brought by Grayscale. Grayscale, which created the Bitcoin Trust in 2013, had long been a significant player in the market. However, the closed-ended nature of the product led to shares sometimes trading at substantial premiums or discounts to their net asset value, prompting Grayscale to seek conversion into an ETF to ensure trading at par.
Last week, the SEC made a surprising pivot by moving towards allowing ETFs for Ether, the second-largest cryptocurrency by market value. This shift comes despite the agency’s overall skepticism towards the crypto industry under Chair Gary Gensler, following a series of scandals.
The group of Bitcoin funds, which collectively hold assets worth $58.5 billion to date, has been hailed as one of the most successful new ETF categories. Despite this success, critics argue that the volatile nature of digital assets makes them ill-suited for widespread adoption, even within ETFs.
Countries like Singapore and China have imposed strict regulations or outright bans on investor access to cryptocurrencies. In the US, Vanguard Group, one of the largest asset managers alongside BlackRock, has no plans to offer crypto-related products, according to a spokesperson in January.
Bitcoin has experienced a remarkable recovery, quadrupling in value since the start of last year, aided by the introduction of these ETFs. The token rose about 1 percent to $68,797 as of 12:48 PM on Wednesday in Singapore.
The rise of BlackRock’s iShares Bitcoin Trust as the largest Bitcoin fund underscores the growing acceptance and mainstream adoption of cryptocurrency investments, despite ongoing regulatory uncertainties and market volatility.