The iShares Bitcoin ETF (IBIT), managed by BlackRock, has become the first spot Bitcoin product to hold more than $2 billion worth of the cryptocurrency. The fund achieved this milestone on Friday after adding about $170 million worth of bitcoin on Thursday, according to Bloomberg analyst James Sayffart.
IBIT is one of the several spot bitcoin ETFs that launched in the past year following the U.S. Securities and Exchange Commission (SEC) approval. Unlike previous products, such as Grayscale’s GBTC, which was converted from a closed-end fund to a spot ETF, these new funds directly track the price of bitcoin and allow investors to buy and sell shares on the stock market.
IBIT, which debuted on January 11, 2024, has been the most popular among these funds, attracting over $2 billion in assets under management (AUM) as of Friday. Despite IBIT’s huge AUM, it is not the only fund close to achieving this feat. According to its latest filing, Fidelity’s Wise Origin Bitcoin Fund (FBTC) has amassed nearly 44,000 bitcoins since January 25. FBTC is the second-largest spot bitcoin ETF in terms of AUM, followed by VanEck’s Bitcoin Trust (VBTC).
Nate Geraci, the president of ETF Store, a research and advisory firm, said that IBIT could soon lose its lead as the number one spot bitcoin ETF as more investors diversify their exposure to the cryptocurrency. He also noted that IBIT ranks third in asset gathering among the more than 600 ETFs launched in the past year, which shows the strong demand for bitcoin products.
Benefits Of IBIT And Spot Bitcoin ETFs
IBIT and other spot bitcoin ETFs offer several benefits for investors who want to gain exposure to the cryptocurrency without having to buy, store, or secure it themselves. These funds provide liquidity, transparency, tax efficiency, and regulatory oversight, which can lower the barriers to entry and increase the adoption of Bitcoin.
However, investing in IBIT and other spot bitcoin ETFs also involves significant risks, such as volatility, hacking, theft, fraud, regulatory uncertainty, and environmental concerns. Investors should know these risks and research before investing in any Bitcoin product. As the SEC warned in its approval order, “investing in the Shares involves a high degree of risk, including the risk of losing some or all of the principal amount invested.”
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