On January 27, BlackRock iShares Bitcoin ETF (IBIT) became the first among the latest spot Bitcoin products to reach an asset size of US$2 billion. This figure does not include Grayscale’s GBTC, which had nearly $30 billion in assets under management when it transitioned from a closed-end fund to a spot ETF.
Investors added $170 million to IBIT, and the fund purchased 4,300 Bitcoins, bringing the total number of tokens to 49,952. On Friday, the price of Bitcoin exceeded $40,000 and assets under management exceeded $2 billion.
ETF Store President Nate Geraci said that the fund’s current asset management scale has exceeded US$2 billion. It ranks third in asset collection among more than 600 ETFs launched last year. Geraci believes that IBIT will soon take over the number one spot.
The next fund to cross the $2 billion mark is likely to be Fidelity’s Wise Origin Bitcoin Fund (FBTC), which held just under 44,000 Bitcoins as of January 25.
The early dominance shows the strength of the two asset management giants in marketing and distribution channels, which help promote products into institutional and retail portfolios. Despite Bitcoin’s post-launch plunge, which resulted in double-digit losses for IBIT and FBTC, inflows have continued to grow. Their strong distribution capabilities and investor resistance to smaller issuers have put the two companies well ahead in the field.
ETF Data and Research Center analyst Roxanna Islam pointed out that BlackRock and Fidelity have advantages that other issuers do not have in terms of liquidity and brand awareness, especially for those who are hesitant to invest in emerging asset classes. This is particularly important for determined retail investors.
VettaFi analysis firm pointed out that it is currently in the early stages of competition, but it expects that as issuance volume and assets increase, the gap between BlackRock, Fidelity and other issuers will widen.
While it’s a crowded space, Nate Geraci said the strong performance shows there’s still plenty of room for growth in the spot Bitcoin ETF space.
Nate Geraci said: “For an ETF in any asset class, reaching $500 million is no small feat, let alone $2 billion in assets under management. To achieve this in a novel asset class in less than two weeks after launch is impressive.”
So far, except Grayscale Bitcoin Trust (GBTC) In addition, all spot Bitcoin ETFs that began trading this month have achieved net inflows. While GBTC is by far the world’s largest cryptocurrency fund with $22 billion in assets, it has lost about $4 billion since converting to an ETF.
GBTC’s fees are the highest in the industry at 1.5%, which is lower than the 2% fee before conversion, but still higher than its closest competitors. Franklin Templeton’s fund has the lowest expense ratio among spot Bitcoin ETFs at 0.19% after the exemption, while BlackRock and Fidelity are close behind with final fees of 0.25% after the exemption period.
SkyBridge Capital analyst Anthony Scaramucci said companies such as BlackRock and Fidelity will likely remain in the lead in the long term. "BlackRock and Fidelity are going to be the two dominant names. They have the largest sales force. The focus of financial services is assets, and assets are the two largest players in the ETF space. So I think they will be the two A winner."
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