BlackRock Bitcoin ETF IBIT Surpasses 1,195 Funds in Revenue

Michael Saylor, the CEO of Strategy, has made a bold prediction regarding BlackRock's Bitcoin ETF, the iShares Bitcoin Trust ETF (IBIT). According to Saylor, IBIT is poised to become the most profitable ETF among the numerous offerings from the asset management giant BlackRock. This prediction comes after the ETF, launched last year, has already surpassed 1,195 other funds offered by BlackRock in terms of revenue generation.

As of June 23, the ETF was trading at $101,000, suggesting a potential 129-fold gain. Saylor's optimism is rooted in the fixed supply of 21 million Bitcoin, which he believes will drive the value of the cryptocurrency higher. Strategy, under Saylor's leadership, has been actively accumulating Bitcoin as a corporate reserve asset, holding more than half of the 848,902 BTC currently owned by the firm.

IBIT has seen substantial inflows from both institutional and retail investors, generating more revenue than BlackRock’s iShares Core S&P 500 ETF (IVV). With an expense ratio of 0.25%, IBIT brings in an estimated $187.2 million in annual fees, slightly edging out the $187.1 million made by IVV, which is nearly nine times larger in assets and charges just 0.03%. This shift underscores the surging investor demand for Bitcoin and the significant fee compression in core equity exposure. Since spot Bitcoin ETFs started trading in January 2024, IBIT has attracted $52 billion of the combined $54 billion in net inflows, holding more than 55% of all Bitcoin ETF assets.

The surge in cash into Bitcoin ETFs followed the decision by US regulators to open the door to mainstream adoption, prompting an influx of capital from hedge funds, pensions, and banks. IBIT, with an expense ratio similar to its peers, is already a top-20 ETF by trading volume. This indicates the pent-up demand for investors to gain exposure to Bitcoin as part of their overall portfolio without having to open a separate account elsewhere. Bitcoin's supremacy over smaller altcoins has widened, with the world’s largest cryptocurrency trading above $100,000, propelled by the pro-crypto stance of President Donald Trump.

Wall Street’s buying spree has been led by Michael Saylor’s Strategy, which has used its cash to accumulate a significant amount of Bitcoin. Hedge funds have also piled into the firm’s convertible debt, capitalizing on arbitrage trades that involve buying the bonds while shorting the stock. However, Strategy has faced legal challenges. The firm was sued for allegedly hiding Bitcoin risks, with new rules revealing a $5.9 billion unrealized Bitcoin loss. This has led to a drop in the firm's stock price as investors question the transparency of its Bitcoin strategy. Despite these challenges, Saylor remains bullish on Bitcoin, predicting that its price will surge to $136,000 in July. This prediction is based on the firm's holdings of more than 597,000 Bitcoin worth about $63 billion.

Institutional investors have also been pouring significant amounts of Bitcoin and Ethereum into their portfolios, aiming to replicate Michael Saylor's strategy for the top altcoin. However, analysts have cautioned about the potential system risk in this approach.