Bitcoin ETFs named BlackRock’s top money makers

BlackRock has revealed that its iShares bitcoin ETF suite has now become the firm’s most profitable product line following the launch of its Australian bitcoin ETF last month. 

A BlackRock executive has revealed that the iShares Bitcoin ETF range is now the firm’s most profitable product line.

Launched in January 2024, BlackRock’s US spot bitcoin ETF, IBIT, raced to US$70 billion in assets in record time and had already generated an estimated $245 million in annual fees by October of that year while an Australian version was launched last month.  

With allocations now approaching $100 billion across the firm’s entire bitcoin ETF range, Cristiano Castro, BlackRock Brazil’s director of business development, said it has become BlackRock’s most profitable product line.  

Speaking to local media at the Blockchain Conference in São Paulo, Castro called the development “a big surprise”.

“When we launched, we were optimistic,” he said. “But we didn’t expect this scale.”  

IBIT’s rapid rise has been driven by BlackRock’s global distribution network and a surge of retail, wealth and institutional demand following US approval of spot bitcoin ETFs on 10 January 2024.  

Seen as a convenient and lower-cost entry point, bitcoin ETFs have emerged as the preferred way for many investors to access to an asset class that was previously out of reach.  

Having since expanded into other global markets with bitcoin ETFs like Brazil’s IBIT39, the firm now holds over 3 per cent of all bitcoin in circulation. Managing over 1,400 ETFs across the globe and with $13.4 trillion in assets under management, BlackRock is the world’s largest asset manager.  

Hailed as a milestone for the local market, BlackRock launched its first bitcoin ETF in Australia just two weeks ago, as reported by Money Management’s sister brand Investor Daily.

Commenting at the time of the launch, Stephen Ead, head of global product solutions for Australia, said the decision followed six months of discussions with institutional clients seeking exposure to cryptocurrencies, particularly bitcoin.  

“Its low correlation to the rest of the portfolio is important, as more investors are beginning to view it as a portfolio diversifier,” he said. “Globally, we’re starting to see not just adoption by retail, but adoption across the wealth market and across institutions as well.”  

At the time, the firm also addressed the volatility of the cryptocurrency, with bitcoin having dropped nearly 30 per cent from its early October peak of around US$126,000 to below US$90,000 on November 18, its lowest in seven months.  

Instead, the firm argued that a small allocation combined with the ETF’s availability during local trading hours allows investors to respond more nimbly and use the cryptocurrency as a diversifier during periods of macro uncertainty.  

“From a multi-asset perspective, it’s around about 1-2 per cent of a multi-asset portfolio. It remains a highly volatile asset class, but the benefit of a local listing in local timezone is that investors can get in, get out very quickly. You don’t need to wait for the US to open.  

“It gives that liquidity in local timezone so investors can make that preference to trade in and trade out fairly quickly and play that volatility,” BlackRock stated.  

Castro similarly addressed this concern at the Blockchain Conference, arguing that ETFs provide a liquid and effective tool for managing such flows.  

Following two previous pullbacks of more than 25 per cent since IBIT’s January 2024 Nasdaq launch, each drop was subsequently followed by a recovery and renewed rally.

Following its own advice, BlackRock has also been backing its bitcoin ETF, with its Strategic Income Opportunities Portfolio recently increasing its IBIT holding by 14 per cent.