The early winner in the bitcoin ETF race has raked in $1 billion

Published Thu, Jan 18 20241:35 PM ESTUpdated Thu, Jan 18 20241:52 PM EST

Jesse Pound @/in/jesse-pound @jesserpound

An old-school asset management giant is flexing its muscle in the race to establish a foothold in bitcoin exchange-traded funds with a stellar first week. As Bernstein analyst Gautam Chhugani highlighted in a note to clients Thursday, BlackRock's iShares Bitcoin Trust (IBIT) has been an early winner among the spot bitcoin ETFs that were approved last week. The fund has amassed $1 billion in net inflows, and while trading volume has cooled somewhat after a massive first day, the fund already has cumulative volume of more than $2 billion. "We are excited to see the strong early demand from clients for IBIT, especially within both the end investor and advisor communities. This exemplifies our commitment to offer clients access to different assets of their choice, and our capability to deliver quality products for all types of investors," Jay Jacobs, U.S. head of thematic and active equity ETFs at BlackRock, said in a statement. The one bitcoin fund that has more assets than IBIT is the Grayscale Bitcoin Trust (GBTC) , which already had about $29 billion when it converted from an over-the-counter product to an exchange-traded product. However, the fund has seen about $1 billion in net outflows over the past week, according to FactSet. The outflows from GBTC are not unexpected. The fund traded at a discount to its net asset value for a long time before it was converted into an ETF, so some of the shareholders were likely waiting for the conversion to help close the gap before making a move. The cost of the funds may also be working against Grayscale, as the fund has an expense ratio of 1.5%, well above its competitors. Grayscale has said that its size and track record justify a premium. Even with the GBTC outflows, the spot bitcoin funds have still seen hundreds of millions of net inflows, according to FactSet. It is unclear how much of the money leaving GBTC has been redirected toward cheaper funds. "GBTC at 150 bps fee vs. ~20bps fee for rest, would mean cheaper ETFs will continue to absorb GBTC outflows. In that context, $900m of net inflows remains impressive," Bernstein's Chhugani said in a note. After IBIT, funds from Fidelity Wise Origin ( FBTC ), Bitwise ( BITB ) and Ark 21Shares ( ARKB ) are next in line in terms of assets among the new funds, according to FactSet.