BlackRock Bitcoin ETF (IBIT): Everything you need to know

BlackRock is the world’s largest asset manager and one of the 11 companies to get their Bitcoin ETF product approved by the SEC on January 10, 2024. They launched this Bitcoin ETF under their iShares brand, named iShares Bitcoin Trust ($IBIT).

They’re betting big on $IBIT, and even launched their first commercial for their Bitcoin ETF.

But who is BlackRock and what is the BlackRock Bitcoin ETF? Here’s everything you need to know.

Who is BlackRock?

BlackRock is an American multinational investment company and the world's largest asset manager, with $9.42 trillion in assets as of June 30, 2023. Did you read that right? That’s $9.42 trillion in assets.

BlackRock provides investment, advisory, and risk management solutions, serving as a fiduciary to its clients.

The company is headquartered in New York City and has a global presence, with 70 offices in 30 countries and clients in 100 countries. BlackRock is also known for managing the iShares group of exchange-traded funds and for its Aladdin software, which tracks investment portfolios for major financial institutions.

Before we get into the Bitcoin ETF, what is an ETF?

An Exchange-Traded Fund (ETF) is a financial instrument that comprises a collection of assets, such as stocks, bonds, or commodities, and is traded on stock exchanges. ETFs offer investors a way to diversify their portfolios without directly owning the underlying assets. These funds are designed to track the performance of a specific index or asset class.

What is the BlackRock Bitcoin ETF?

The BlackRock Bitcoin ETF is a specific type of ETF that tracks the price movements of Bitcoin. Unlike purchasing and holding actual bitcoin, investing in the BlackRock Bitcoin ETF involves buying shares of the fund, providing a more traditional and regulated avenue for gaining exposure to the cryptocurrency market.

For eg: You would be invest in the price movements of Bitcoin by investing in the Blackrock Bitcoin ETF ($IBIT) directly in your brokerage platform.

How will the BlackRock Bitcoin ETF ($IBIT) affect the crypto market?

The BlackRock Bitcoin ETF ($IBIT) will potentially destigmatize ownership of Bitcoin as the ETF is a regulated avenue to access the price of Bitcoin.

It also opens up Bitcoin access to institutional investors which means we could see north of $100 billion being poured into Bitcoin via the BlackRock Bitcoin ETF and other Bitcoin ETFs.

What does this mean for the price of Bitcoin? Will your Bitcoin holdings go up? We don’t know. We’re just grabbing a bowl of popcorn and sitting in wait 🍿

How’s the BlackRock Bitcoin ETF doing so far?

The BlackRock Bitcoin ETF ($IBIT) started trading on January 11, 2024, along with several other spot Bitcoin ETFs. This marked a significant milestone in the cryptocurrency sector as the U.S. Securities and Exchange Commission (SEC) had previously rejected all spot Bitcoin ETFs on investor protection concerns.

As of January 14, 2024, BlackRock's spot Bitcoin ETF held 11,439 BTC. The management fee for the iShares Bitcoin Trust ($IBIT) is 0.25%, but BlackRock has waived a portion of the Sponsor's Fee for the first 12 months commencing on January 11, 2024, so that the fee will be 0.12% of the net asset.

It's important to note that while the iShares Bitcoin Trust ($IBIT) provides direct exposure to the price of Bitcoin, BlackRock also offers the iShares Blockchain and Tech ETF ($IBLC), which tracks an index composed of U.S. and non-U.S. companies involved in the development, innovation, and utilization of blockchain and crypto technologies. However, this ETF does not directly track the price of Bitcoin or hold Bitcoin as an asset.

Bitcoin vs. Bitcoin ETF: Should I buy Bitcoin directly or the BlackRock Bitcoin ETF?

It's crucial to grasp the distinction between Bitcoin and Bitcoin ETFs. Bitcoin, the pioneering cryptocurrency, is a decentralized digital currency that operates on a blockchain.

On the other hand, a Bitcoin ETF is a financial product that tracks the performance of Bitcoin, allowing investors to gain exposure to the cryptocurrency without directly owning it.

Pros and Cons of Investing in the BlackRock Bitcoin ETF vs. Direct Bitcoin Investments:

Investing in the BlackRock Bitcoin ETF:

Pros:

1. Regulated Environment: The BlackRock Bitcoin ETF operates within the regulated framework of traditional financial markets, providing a level of oversight and investor protection that some may find reassuring.
2. Ease of Access: Investing in the BlackRock Bitcoin ETF is relatively straightforward, especially for those familiar with traditional brokerage platforms. It allows investors to gain exposure to Bitcoin without navigating the complexities of cryptocurrency exchanges (although, we’ve fixed this at Juno)

Cons:

1. Management Fees: Investors in the BlackRock Bitcoin ETF will incur management fees, which can impact overall returns. The management fee for the BlackRock Bitcoin ETF ($IBIT) is 0.25%, but BlackRock has waived a portion of the Sponsor's Fee for the first 12 months commencing on January 11, 2024, so that the fee will be 0.12% of the net asset.
2. Indirect Ownership: When investing in the BlackRock Bitcoin ETF, you don't own the actual Bitcoin but rather shares in the fund.

Direct Bitcoin Investments:

Pros:

1. Ownership and Control: Owning Bitcoin directly means having ownership and control of the actual cryptocurrency. This eliminates the need for intermediaries and allows for greater control over what you do with your bitcoin
2. Potential for Higher Returns: Direct ownership may offer the potential for higher returns if the value of Bitcoin appreciates. This is because, unlike ETFs, there are no management fees eating into your profits.

Cons:

1. Technical Complexity: Managing and securing a Bitcoin wallet, understanding private keys, and staying vigilant against cybersecurity threats may be intimidating for less tech-savvy investors.

We agree, buying and owning Bitcoin directly used to be complex. But, we made it a lot simpler for you to buy and own Bitcoin. How? One app for cash and crypto.

How to buy Bitcoin on Juno?

1. Sign up and create your Juno account
2. Add money to your Juno account: You can fund your Juno account the way you’re used to. Transfer money via ACH, Wire, Cash App, Venmo, or Apple Cash.
3. Buy Bitcoin: Buy Bitcoin starting with as low as $10. (or you can choose from over 30+ coins including your favorite L1s and L2s)
4. Transfer Bitcoin to your wallet: You can now transfer your Bitcoin to your wallet instantly. No holding period on your withdrawals.