In a momentous achievement, BlackRock’s Bitcoin exchange-traded fund (ETF), has crossed the $2 billion mark in assets under management (AUM) just a fortnight after its debut on the Nasdaq. This significant growth spurt was catalyzed by Bitcoin’s price resurgence past the $42,000 mark on January 26, after holding a flat line for nearly a week following a sharp sell-off post the launch of ETFs on January 11.
AUM refers to the total market worth of all assets held by a fund, representing clients’ interests. With this burgeoning growth, BlackRock’s iShares Bitcoin Trust (IBIT) holds the dominant position, leading the competition for investment capital, outstripping rivals such as Fidelity’s Wise Origin Bitcoin Fund (FBTC) that recently witnessed flows of $1.8 billion over the previous 10 days.
Tapping into its established market stance as the world’s largest asset manager, BlackRock is pulling in more diverse audience sets to its cryptocurrency-centric offering. Unlike contemporaries like VanEck who focused their promotional efforts on early adopters and the crypto community, BlackRock chose a different line, guiding baby boomers with a two-minute explainer video featuring one of its top executives laying out Bitcoin’s investment potential and the method to gain exposure to its ETF.
The competitive annual fee structure put forth by ETF issuers might also be a significant lure attracting capital. The iShare ETF by BlackRock introduced a fee of 0.12% for the initial year or until it amassed its first $5 billion in AUM, after which the plan is to steep it up to 0.25%. Other issuers like ARK Invest, VanEck, and Bitwise also offer competitive fees amounting to 0.21%, 0.25%, and 0.20% respectively. It’s important to note that these expenses are subtracted from the ETF’s performance, indirectly impacting investors return.
As per Bloomberg analyst, James Seyffart’s prognosis, he anticipates Bitcoin ETFs to gather a whopping $10 billion in investment capital within the first year itself.