BlackRock Bitcoin ETF IBIT Surpasses S&P 500 Fund in Annual Fee Revenue

BlackRock, the world's largest asset manager, has reported a significant milestone with its Bitcoin spot ETF, IBIT. The fund has now surpassed its flagship S&P 500 index fund in terms of annual fee revenue, marking a notable shift in the asset management landscape. IBIT, with an approximate asset under management (AUM) of $75 billion, has a fee rate of 0.25%, generating an expected annual revenue of $187.2 million. In contrast, the iShares Core S&P 500 ETF (IVV), which has an AUM of $624 billion, charges a fee of 0.03%, resulting in slightly lower annual revenue of $187.1 million.

This achievement underscores the robust demand for Bitcoin among investors and the significant compression in stock ETF fees. Despite intense pricing competition among spot Bitcoin ETFs, IBIT has demonstrated that investors are willing to pay higher fees for products they believe will genuinely enhance their portfolio value. Since the approval of spot Bitcoin ETFs for trading in January 2024, IBIT has attracted $520 billion of the $540 billion in net inflows, commanding over 55% of the Bitcoin ETF market and establishing itself as the dominant player in the sector.

The surge in capital from hedge funds, pension funds, and banks following the reluctant approval of Bitcoin ETFs by U.S. regulators has further solidified IBIT's position. The fund's fee rate is comparable to similar products, yet it still ranks among the top 20 ETFs by trading volume in the U.S. This shift in revenue leadership highlights the suppressed demand for Bitcoin exposure among investors, who seek to include it in their portfolios without the need for additional accounts. It also reflects Bitcoin's leadership position in the cryptocurrency market, where its value storage properties have left other tokens far behind.

As Bitcoin breaches the $100,000 mark, its leading position in the cryptocurrency market is further solidified. The buying spree on Wall Street is primarily led by Strategy, a company that continues to use cash to increase its holdings of Bitcoin. Analysts suggest that the dual driving force of IVV and IBIT could help BlackRock surpass State Street, becoming the new liquidity leader in the ETF market. Based on trading volume, BlackRock holds approximately 25% of the market share, second only to State Street's 31%.