BlackRock’s Bitcoin ETF Surpasses Grayscale’s GBTC to Become Largest Spot Bitcoin Product

BlackRock’s iShares Bitcoin Trust has emerged as the world’s largest Bitcoin fund, amassing nearly $20 billion in assets since its launch in the United States earlier this year. According to HODL15Capital, the ETF held $19.68 billion worth of Bitcoin on Tuesday, surpassing Grayscale Bitcoin Trust’s (GBTC) $19.65 billion.

Competitive Landscape

Fidelity Investments holds the third-largest spot with its $11.1 billion Bitcoin fund. The debut of BlackRock’s Bitcoin ETF, alongside eight other funds, coincided with Grayscale’s transition to an ETF on January 11. This approval of spot Bitcoin ETFs represented a significant milestone for the crypto industry, increasing accessibility for investors and contributing to Bitcoin’s surge to a record high of $73,798 by March.

High Inflows and Outflows

Since its inception, BlackRock’s iShares Bitcoin Trust has seen the highest inflow, totaling $16.5 billion. In contrast, Grayscale experienced withdrawals amounting to $17.7 billion during the same period, possibly due to higher fees and exits by arbitragers. Grayscale plans to launch a lower-fee clone of its main fund, as indicated in a March regulatory filing.

Historical Context

The SEC approved the first US spot Bitcoin ETFs in January after a court reversed its previous stance in a case brought by Grayscale. Initially created in 2013, Grayscale Bitcoin Trust became the largest vehicle of its kind, though its trading often deviated from net asset value, prompting Grayscale to convert it to an ETF.

Success and Criticism

Bitcoin ETFs have quickly become one of the most successful new categories, with the group of funds managing $58.5 billion in assets. However, critics argue that the volatility of digital assets makes them unsuitable for widespread adoption, even within ETF structures. Some countries, including Singapore and China, have imposed restrictions or bans on cryptocurrency investments.

Despite this, Bitcoin’s value has quadrupled since the start of last year, driven partly by the introduction of ETFs, marking a strong recovery from the 2022 bear market.

Expanding the ETF Market

Last week, the SEC also showed its willingness to approve ETFs for Ether, the second-largest cryptocurrency. On May 23, the SEC approved applications from VanEck, BlackRock, Fidelity, Grayscale, Franklin Templeton, ARK 21Shares, Invesco Galaxy, and Bitwise for issuing spot Ether ETFs. Notably, several issuers removed staking from their final amendments. Analysis firm Kaiko predicts that Grayscale’s forthcoming spot Ethereum ETF may see significant outflows, potentially averaging around $110 million per day.