BlackRock's Bitcoin ETF has just surpassed its competitor Grayscale by accumulating $20 billion in assets.
300,000 bitcoins for BlackRock
It's done, BlackRock manages the largest fund in the world invested solely in bitcoin: the IBIT ETF. The latter hosts nearly 300,000 bitcoins.
It’s a phenomenal success. Fidelity’s “IBIT” and “FBTC” ETFs raised $6.5 billion in their first month of trading. That's more than each of the 5,500 other ETFs launched before them.
IBIT is by far the best ETF launch in history. The following chart shows the yawning gap between IBIT and the second-fastest ETF in history to reach the $20 billion mark in assets.
JPMorgan's JIPO ETF took 985 days to reach $20 billion, compared to just 137 days for BlackRock's ETF:
Do you think Vanguard is taking notes? »
These inflation figures would have to be corrected to be precise, but the result would remain clear. Even Fidelity's FBTC ETF, with already more than $11 billion, is on track to beat the previous record.
Note, however, that a substantial part of the funds captured by BlackRock came from the GBTC trust which already existed… So much so that the Bitcoin ETFs slightly “cheated”.
GBTC dethroned
When the nine new Bitcoin ETFs were introduced in January, Grayscale's GBTC trust already contained 620,000 BTC! This jackpot represented 29 billion dollars at the time. This head start is due to the fact that the GBTC trust has served as an alternative to ETFs since 2013.
Today, Grayscale only holds 280,000. This redistribution from the GBTC ETF to its competitor IBIT is due to the fact that BlackRock offers much lower management fees. They are 0.2% compared to 1.5% for Grayscale. That is to say 7.5 times more!
Despite these painful fees, the Grayscale Bitcoin Trust ETF (GBTC) has held up well. Although investors have withdrawn more than 330,000 BTC, things have been stabilizing for the past five weeks. The bleeding appears to be over.
Grayscale's strategy will therefore have paid off if we stay there. Matching BlackRock's fees would certainly have made it possible to keep all 620,000 bitcoins ($43 billion at current prices), but the revenue would be much lower.
Indeed, even if the 280,000 bitcoins remaining in the GBTC ETF “only” represent $20 billion, let’s remember again that the management fees are 7.5 times higher…
A fee of 1.5% on $20 billion gives us $300 million, while 0.2% on $43 billion gives us only $86 million. QED.
1 million bitcoins = 1 Nakamoto
US ETFs collectively hold over a million bitcoins. That's almost 70 billion dollars.
However, net inflows since January 11 were only $14 billion. The gap comes from the $43 billion already invested in the GBTC trust and the marked appreciation of bitcoin since January 11.
In other words, it took barely 14 billion to make bitcoin rise by 50%. At this rate, some estimate we'll hit $135,000 by the end of the year. To convince you, here are two very telling graphs.
You can see the almost perfect correlation between inflows into ETFs and the price of bitcoin (left chart). The extrapolation arguing for $135,000 (right chart) assumes that ETFs will manage to attract $35 billion (net) by December 31:
Obviously, profit taking could be greater than expected on the road to $135,000.
However, many investment funds make similar predictions. Starting with Alliance Berstein ($700 billion) which is counting on $90,000 before the end of the year, then $150,000 in 2025.
Same story with the Chartered Bank which anticipates net flows of 50 to 100 billion dollars for 2024. Enough to cross 100,000 dollars this year and aim for 200,000 dollars the following year.
The British fund CrossBridge Capital suggests that Bitcoin will reach $250,000 in the next 3 to 5 years.
These predictions are realistic if we are to believe the CIO of Bitwise (a Bitcoin ETF). Matt Hougan estimates that the $14 billion in net inflows since January 11 are just one ” amuse bouche “.
This is all the more true as ETFs have already won over a record number of major investors (more than 1,000). And in particular the Morgan Stanley bank and the Wisconsin state pension fund.
And speaking of the big investment bank, Goldman Sachs said on Thursday that the SEC's approval of ETFs was “a psychological turning point”. It's a “astounding success”.
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