Feb 20, 2024 Commodity
3 reasons to consider the iShares Bitcoin Trust (IBIT) for bitcoin exposure.
Bitcoin is the world’s leading and most widely adopted cryptoasset with a market cap of over $800 billion.1 Bitcoin’s global, decentralized, and scarce nature gives it the potential to be viewed as a digital store of value, similar to the role gold has historically played. Investors have taken notice as institutions and individuals alike have been adding bitcoin exposure to their financial assets. Yet until now, gaining exposure to bitcoin has often presented investors with several obstacles, from needing to open new accounts, facing high trading fees, and addressing security challenges. But just as ETFs have brought millions of investors efficient access to previously difficult-to-reach markets like gold and international stocks, IBIT now brings access to bitcoin in a convenient way.
Since bitcoin’s launch in 2009, its pace of adoption has been even faster than that of other breakthrough technologies like the internet and mobile phones. Several factors have accelerated this adoption, including:
Time needed to achieve 300 million users
The first cellular mobile phone was used in 1973. Source: NPR, Our World in Data. January 1, 1983, is considered the official birthday of the internet. Source: University System of Georgia, Our World in Data. Initial price of bitcoin set in 2010. Source: Bloomberg, Cambridge Center for Alternative Finance, Crypto.com. Past performance does not guarantee future results.
Chart Description: Bar chart displaying time needed to reach 300 million users between crypto, the internet, and mobile phones since their inceptions. Crypto reached 300 million users faster than the internet and mobile phones.
While there are several use cases, many investors view bitcoin in their portfolios as a "digital store of value." Similar to gold, bitcoin may be viewed as a diversifying asset that can serve as a potential hedge against increasing geopolitical and economic risks. While bitcoin has a short history compared to gold, it shares notable similarities, as it exists independently of any one country or government, has limited supply, and is global in nature.
Chart Description: Color-coded table comparing various characteristics between U.S. Treasuries, Gold, and bitcoin. Comparisons include supply, volatility, length of track record, governance, cost to move, cost to store and market cap.
Despite rising bitcoin adoption, direct investing in bitcoin presents unique complexities for investors. That’s why we launched IBIT — the iShares Bitcoin Trust — to make access to bitcoin easier for all.
Here’s why we believe IBIT can change the game for investors:
The debut of IBIT marks a significant milestone for both digital assets and traditional markets. IBIT’s launch is rooted in iShares’ commitment to providing access, making bitcoin available to more investors through the convenience, efficiency, and familiarity of an ETF.
Access IBIT through your online brokerage or discuss with your financial planner to find out how IBIT may fit into your portfolio.
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1 Bitcoin predominance based on its market cap of $860B, which accounts for 50% of the total market cap of all cryptoassets excluding stablecoins (Source: Coin Metrics, as of December 31, 2023).
2 Source: Investopedia Financial Literacy Survey, as of Feb. 2022 (n = 1000).
3 Refers to the technology and operational frictions that have slowed adoption of digital assets from both retail and institutional investors, including lack of digital asset custody and trading support from most traditional service providers and the complexity associated with direct bitcoin trading and self-custody.
4 Source: Boston Consulting Group (“What does the future hold for crypto exchanges”) and United Nations, as of July 2022. Crypto users measured by analyzing on-chain data from bitcoin, ethereum, and other blockchains and assuming all on-chain users own some crypto. For illustrative purposes only.
5 Supply of U.S. Treasuries is uncapped. Gold supply is constrained by the total amount of gold deposits available on earth and potential additional deposits that may be found in space. Although many observers believe this is unlikely at present, there is no guarantee that the current 21 million supply cap for outstanding bitcoin, which is estimated to be reached by approximately the year 2140, will not be changed.
6 Based on 1-year trailing standard deviation measuring dispersion of daily returns from the mean over the 10-year period from 10/22/2013 to 10/22/2023. Low indicates <10%, Medium indicates 10-40%, and High indicates >40%. U.S. Treasuries represented by 10-yr treasury yield sourced from Bloomberg. Gold represented by the Bloomberg 1 oz spot price (XAU). Bitcoin represented by CME CF Bitcoin Reference Rate - New York Variant.
7 Short indicates <100-year track-record, medium indicates 100–250-year track-record, long indicates >250-year track-record. Standard deviation measures how dispersed returns are around the average. A higher standard deviation indicates that returns are spread out over a larger range of values and thus, more volatile.
8 Cost to move and store reflects the average fees investors must pay to move and store the asset at a third-party or in self-custody. U.S. Treasuries and bitcoin can be stored digitally and at low cost. Physical gold storage in a secure vault carries high fees estimated at 0.5% of the value of gold per year (Source: International Depository Services Group, as of Dec. 2023).
9 Sources: St. Louis Federal Reserve and Bloomberg, as of Dec. 2023.
10 BlackRock is the world’s largest ETF manager by AUM, managing $3.5T in global ETF investment vehicles as of December 31, 2023.
11 Source: BlackRock, as of December 31, 2023.
This information must be preceded or accompanied by a current prospectus. Investors should read it carefully before investing.
Investing involves risk, including possible loss of principal.
The iShares Bitcoin Trust is not an investment company registered under the Investment Company Act of 1940, and therefore is not subject to the same regulatory requirements as mutual funds or ETFs registered under the Investment Company Act of 1940. The Trust is not a commodity pool for purposes of the Commodity Exchange Act. Before making an investment decision, you should carefully consider the risk factors and other information included in the prospectus.
Investing in digital assets, such as bitcoin, involves significant risks due to their extreme price volatility and the potential for loss, theft, or compromise of private keys. The value of the shares is closely tied to acceptance, industry developments, and governance changes, making them susceptible to market sentiment. Digital assets represent a new and rapidly evolving industry, and the value of the Shares depends on the acceptance of bitcoin. Changes in the governance of a digital asset network may not receive sufficient support from users and miners, which may negatively affect that digital asset network’s ability to grow and respond to challenges Investing in the Trust comes with risks that could impact the Trust's share value, including large-scale sales by major investors, security threats like breaches and hacking, negative sentiment among speculators, and competition from central bank digital currencies and financial initiatives using blockchain technology. A disruption of the internet or a digital asset network, such as the Bitcoin network, would affect the ability to transfer digital assets, including bitcoin, and, consequently, would impact their value. There can be no assurance that security procedures designed to protect the Trust’s assets will actually work as designed or prove to be successful in safeguarding the Trust’s assets against all possible sources of theft, loss or damage.
Buying and selling shares of ETFs may result in brokerage commissions.
This material represents an assessment of the market environment as of the date indicated; is subject to change; and is not intended to be a forecast of future events or a guarantee of future results. This information should not be relied upon by the reader as research or investment advice regarding the funds or any issuer or security in particular.
The strategies discussed are strictly for illustrative and educational purposes and are not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. There is no guarantee that any strategies discussed will be effective.
The information presented does not take into consideration commissions, tax implications, or other transactions costs, which may significantly affect the economic consequences of a given strategy or investment decision.
This material contains general information only and does not take into account an individual's financial circumstances. This information should not be relied upon as a primary basis for an investment decision. Rather, an assessment should be made as to whether the information is appropriate in individual circumstances and consideration should be given to talking to a financial professional before making an investment decision.
The information provided is not intended to be tax advice. Investors should be urged to consult their tax professionals or financial professionals for more information regarding their specific tax situations.
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