BlackRock's iShares Bitcoin Trust becomes the world's largest cryptocurrency fund

BlackRock’s iShares Bitcoin Trust has emerged as the world’s largest fund for the main cryptocurrency, with roughly $20 billion in total assets since its January US launch, Bloomberg News reported on Wednesday. As of Tuesday, the exchange-traded fund (ETF) had $19.68 billion in tokens, topping the Grayscale Bitcoin Trust’s $19.65 billion, according to Bloomberg statistics.

The debut of nine new ETFs in January, including the iShares Bitcoin Trust, had a substantial impact on market dynamics. Grayscale’s fund had assets totalling around $29 billion at the time. The US Securities and Exchange Commission (SEC), which had previously been sceptical of spot bitcoin ETFs due to market manipulation concerns, approved these new products in January following Grayscale Investments’ successful legal appeal last year.

Despite its initial edge, Grayscale has seen a steady outflow since its ETF conversion began trading on January 11. Market watchers have closely watched the movement of assets between BlackRock’s ETF and Grayscale Bitcoin Trust. 

BlackRock’s quick rise in the extremely competitive spot bitcoin ETF market demonstrates that being first to market does not ensure long-term supremacy, according to Aniket Ullal, CFRA’s head of ETF statistics and analytics. Ullal emphasised that early entrants may face legacy disadvantages.

Grayscale has faced issues such as selling pressure and a 1.5 per cent management fee, which is much more than the about 0.25 per cent average cost charged by its newer competitors, like Fidelity Investments and ARK Investments. 

In contrast, BlackRock has used its enormous distribution network to reach independent financial advisors and wealth managers. Jay Jacobs, BlackRock’s US head of thematic and active ETFs, told Reuters on Tuesday that the ETF has seen significant inflows from both the wealth management community and private advisors. 

“A lot of early movers went from direct ownership of digital assets to IBIT,” Jacobs explained, noting that some of these accounts held millions of dollars in cryptocurrency.

While several hedge funds reported large stakes in the new ETFs by the end of the first quarter, other institutional investors were more cautious. Jacobs admitted that garnering institutional support will be a slow process that may take years.

As the competitive environment for bitcoin ETFs shifts, BlackRock’s iShares Bitcoin Trust has emerged as a key competitor, highlighting the potential for new entrants to redefine market leadership in the cryptocurrency investing industry.

(With inputs from Reuters)