BlackRocks Bitcoin ETF IBIT Outearns S&P 500 ETF IVV With 25 Basis Points Fee

BlackRock’s Bitcoin ETF, IBIT, has achieved a significant milestone by generating more fee revenue than its S&P 500 ETF, IVV. IBIT brings in approximately $186 million annually, surpassing IVV’s $183 million. This is particularly noteworthy given that IBIT was launched less than a year and a half ago and has already accumulated nearly $75 billion in assets under management (AUM). In contrast, IVV, with $609 billion in AUM, charges a much lower fee of 3 basis points, while IBIT charges 25 basis points.

IBIT’s rapid success has been driven by strong institutional demand and robust inflows. This week alone, IBIT saw net inflows of $153 million, contributing to a total of $2.2 billion in inflows across all US ETF issuers. The inflows into spot Bitcoin ETFs have been particularly strong, with 14 consecutive days of inflows this month, marking one of the best-performing months since inception.

Despite tracking different markets, IBIT and IVV show comparable levels of volatility. IBIT’s price swings closely reflect Bitcoin’s, fueling concerns over how emerging cryptocurrencies might influence future performance. Analysts have noted that IBIT was 5.7 times more volatile a year ago, but that ratio has now dropped to just above 1, indicating Bitcoin’s volatility is currently nearly equal to that of US stocks.

IBIT’s success highlights the growing appetite for Bitcoin and other crypto ETFs. The higher fee revenue generated by IBIT, despite its shorter track record and smaller AUM compared to IVV, underscores the potential of Bitcoin ETFs in the current market landscape. This development suggests that investors are increasingly viewing Bitcoin as a viable asset class, driving demand for related ETFs and contributing to their fee revenue.

The strong inflows into Bitcoin ETFs also indicate institutional confidence in the potential for a Bitcoin rally. Despite the current consolidation of Bitcoin's price, the sustained inflows suggest that institutional players remain optimistic about the cryptocurrency's future performance. This confidence is further bolstered by factors such as the US Treasury's SLR exemption and the GENIUS Stablecoin Act, which are seen as supportive of the crypto market.

In summary, BlackRock's IBIT has not only outpaced IVV in fee revenue but has also become a significant player in the ETF market. Its success is a testament to the growing institutional interest in Bitcoin and the potential for crypto ETFs to generate substantial fee revenue. As the market continues to evolve, it will be interesting to see how other crypto ETFs perform and whether they can replicate IBIT's success.