Bitcoin is a widely-adopted form of digital currency that you can now access through the convenience of an exchange-traded fund (ETF). Watch to see how bitcoin ETFs make bitcoin more accessible to more investors.
There’s been a lot of buzz about spot bitcoin ETFs.
But what are they? Let’s start with what is bitcoin.
Bitcoin is the most widely adopted digital asset in the world.1
It is a digital currency that operates on a decentralized network, meaning it is not controlled by any central authority.
Bitcoin functions through computers known as nodes, employing transactions that are meticulously recorded in a publicly accessible ledger called the blockchain. This innovative structure ensures transparency and security in the verification and recording of Bitcoin transactions.
While it was created as a form of internet-native money, today many view bitcoin beyond a form of payment, and some investors view bitcoin as a
· Store of value
· Potential hedge against inflation
· A bet on blockchain innovation and adoption
Until now, investing in bitcoin has largely meant going through a crypto exchange, which can come with complexities around cost, storage and taxation. But the launch of bitcoin ETFs – or exchange-traded funds – is helping make bitcoin more convenient and accessible to investors.
That’s because bitcoin ETFs invest directly in bitcoin, allowing investors to gain exposure to the cryptoasset by owning shares of the ETF.
ETFs are commonly used and available within a traditional brokerage account, alongside stocks and bonds. And they allow you to gain exposure to bitcoin without needing to navigate the burdens of buying and storing it directly.
For more information, visit iShares.com.
1 Based on Bitcoin market cap of $860B, which accounts for greater than 50% of the total market cap of all cryptoassets, excluding stablecoins (Source: CoinGecko, as of Dec. 31, 2023).
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.
Bitcoin is the world’s most recognized and widely adopted cryptocurrency1 – and the first form of internet-native money to gain widespread global adoption. Bitcoin allows for peer-to-peer transactions outside of central intermediaries like banks.
There is no physical form of bitcoin; it is solely a digital currency. Additionally, some people see it as a store of value.
Bitcoin is a decentralized digital asset and one of the foremost applications of blockchain technology. The blockchain is a public, digital database of transactions maintained by a distributed network without a centralized authority. Leveraging the blockchain, bitcoin enables peer-to-peer transactions and ensures the fidelity and security of each transaction without the need of central intermediaries, like banks or clearinghouses.
Bitcoin transactions are validated and new bitcoins are created through a process known as “mining,” during which computers or “miners” race to solve complex mathematical computations. The winning miner updates the blockchain with the latest verified transactions and earns a predetermined amount of new bitcoin generated by the network.
The bitcoins are then held or traded based on supply and demand, which determine the value or dollar price of bitcoin similar to other commodities or assets. Bitcoins are stored in crypto wallets, which are also used to send and receive bitcoin. Each wallet contains a private key that allows you to send bitcoin to complete a transaction, and a public key that allows you to receive bitcoin.
According to bitcoin code, there is a maximum supply of 21 million coins and no new bitcoins will be released after that limit is reached. As of January 2024, there are around 19.6 million bitcoins in circulation, and 1.4 million left to be rewarded. This limited supply is one of bitcoin’s key characteristics, which was designed to increase scarcity – and therefore demand – over time.
Cryptocurrencies like bitcoin have enabled a way for secure transactions to be conducted directly between two parties without the need for an intermediary (e.g., a bank) anywhere in the world. It addresses three centuries-old problems that money and payment systems have faced:
Driving the demand for a bitcoin ETF is the fact that many investors view bitcoin as more than just a form of digital payment.
There are certain trends accelerating bitcoin’s adoption as well:
Over 200 industry and thought leaders gathered at our inaugural Digital Assets Summit, which BlackRock hosted in partnership with Coinbase. Listen to some of the highlights and key perspectives that were shared.
In this studio chat, host Brian Mosoff sits down with Samara Cohen, Chief Investment Officer of ETF and Index Investments at BlackRock, to discuss BlackRock’s journey to introducing IBIT.
00;00;02;27 - 00;00;17;00
Brian Mosoff
Today we are here at our inaugural Institutional Digital Assets Summit with some of the most influential leaders in the industry, including some of our own at BlackRock. We're now joined by Samara Cohen. Thanks so much for being here.
00;00;17;03 - 00;00;19;05
Samara Cohen
Thank you for having me. It's exciting.
00;00;19;08 - 00;00;25;01
Brian Mosoff
So what were some of the inflection points that happened along the way to bring a product like private to market?
00;00;25;07 - 00;00;49;01
Samara Cohen
We think very carefully, especially because at BlackRock we deliver investment strategies in lots of different wrappers. We hold a high bar before launching an ETF as to whether there's incremental value offered by the ETF wrapper. So first with us, it was a journey in Bitcoin and hearing from investors, particularly institutional investors who wanted to engage with the asset class.
00;00;49;02 - 00;01;17;29
Samara Cohen
We really started to hear from investors that they wanted better access alternatives than how they were currently accessing Bitcoin, whether they wanted Bitcoin in an ETF and they were using a futures based ETF which really didn't track spot as effectively as they wanted to, whether they were in a trust structure that had liquidity constraints and high fees, or whether they were simply trying to get the exposure through proxy vehicles like crypto stocks.
00;01;18;02 - 00;01;44;28
Samara Cohen
What we heard was they wanted a an access vehicle that gave them more transparency around costs, better tracking to spot clarity, around custody, and a way to really view their whole portfolio and their whole portfolio risk holistically in one place. So that really developed our conviction around the demand and the value proposition of offering Bitcoin in an ETF wrapper with it.
00;01;45;00 - 00;01;51;20
Brian Mosoff
And now that it's launched, why is it such a pivotal moment or opportunity for BlackRock and Bitcoin?
00;01;51;24 - 00;02;22;20
Samara Cohen
It's an opportunity for a number of reasons. It gives us the ability in many ways to engage with investors who are just entering the investment ecosystem. There are many self-directed investors in the United States who are engaging with crypto and actually haven't engaged with mutual funds and with ETFs. And so is somebody who's kind of spending their career helping more people build portfolios and delivering to them the tools to build better portfolios.
00;02;22;27 - 00;02;41;28
Samara Cohen
The opportunity to meet and engage with this whole new generation of investors is an exciting one. And then for investors who are in the ETF ecosystem already and who want access to Bitcoin, it gives us another tool and another way to help them develop the portfolios that they want.
00;02;42;00 - 00;02;49;12
Brian Mosoff
Thanks so much for being here and I think everyone's excited to see where IBIT in the broader Bitcoin ecosystem go. So hope to see you again soon.
00;02;49;14 - 00;02;50;25
Samara Cohen
Thank you so much for having me.
This information must be preceded or accompanied by a prospectus for the iShares Bitcoin Trust.
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 involves a high degree of risk, including possible loss of principal. An investment in the Trust is not suitable for all investors, may be deemed speculative and is not intended as a complete investment program. An investment in Shares should be considered only by persons who can bear the risk of total loss associated with an investment in the Trust.
The information provided here may not be representative of the experiences of other individuals and does not guarantee future performance. This material is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. The opinions expressed are as of the date indicated and may change as subsequent conditions vary. The information and opinions contained in this material are derived from proprietary and nonproprietary sources deemed by BlackRock to be reliable, are not necessarily all-inclusive and are not guaranteed as to accuracy. As such, no warranty of accuracy or reliability is given and no responsibility arising in any other way for errors and omissions (including responsibility to any person by reason of negligence) is accepted by BlackRock, its officers, employees or agents. This material may contain “forward-looking” information that is not purely historical in nature. Such information may include, among other things, projections and forecasts. There is no guarantee that any of these views will come to pass. Reliance upon information in this material is at the sole discretion of the viewer.
Investing in digital assets involves significant risks due to their extreme price volatility and the potential for loss, theft, or compromise of private keys. The value of the investment is closely tied to acceptance, industry developments, and governance changes, making them susceptible to market sentiment. A disruption of the internet or a digital asset network would affect the ability to transfer digital assets, and, consequently, would impact their value.
The sponsor of the iShares Bitcoin Trust is iShares Delaware Trust Sponsor LLC (the “Sponsor”). BlackRock Investments, LLC ("BRIL"), assists in the promotion of the Trust. The Sponsor and BRIL are affiliates of BlackRock, Inc.
© 2024 BlackRock, Inc. or its affiliates. All Rights Reserved. BLACKROCK and iSHARES are trademarks of BlackRock, Inc. or its affiliates. All other trademarks are those of their respective owners.
A bitcoin ETF (exchange-traded fund) is an investment vehicle that provides exposure by investing directly in bitcoin. Like all ETFs, bitcoin ETFs offer the ease of stock trading, low costs, tax efficiency, and convenience.
As bitcoin has grown in popularity, so have the investment options. One of the ways investors can invest directly in bitcoin is through crypto exchanges. But for investors who prefer the convenience of ETFs, bitcoin ETFs such as the iShares Bitcoin Trust (IBIT) provide exposure through traditional brokerage platforms – the same place you purchase stocks, bonds, and other ETFs.
We recommend you consult with a financial professional to determine if an investment in bitcoin aligns with your personal investment goals. There are several factors to consider. Bitcoin has had periods of significant outperformance relative to major asset classes since its inception, but it has come with significant volatility.2
Investors with a higher risk tolerance may be inclined to allocate more of their portfolio to bitcoin. Every investor’s situation and goals are unique.
Bitcoin is subject to the same tax laws as property. The IRS requires reporting of each bitcoin transaction, which is subject to capital gains tax.3 Investors should consult a tax or financial professional for more information on how they may be impacted by bitcoin tax laws.
Bitcoin is a highly volatile asset exhibiting significant price swings in both directions since its inception in 2009 and may not be suitable for certain investors. Like any investment, there are inherent risks involved with investing in a spot bitcoin ETF and at large concentrations, bitcoin’s volatility can have a large impact on overall portfolio risk.
Bitcoin ETFs help alleviate some of the challenges of investing directly in bitcoin, such as storage. Traditional forms of investing directly in bitcoin require deciding where to store the purchased bitcoin, which can be in a crypto wallet or on a crypto exchange. This approach gives the investor certain direct responsibilities in preventing security risks such as theft or loss of private keys, which are essentially passcodes to a crypto wallet. With a bitcoin ETF, investors own shares of the ETF, removing the need to determine where to store their bitcoin, as this is handled by the ETF's custodian. It’s important to note, however, that investing in a bitcoin ETF still involves risk, including possible loss of principal.
Stay in the know on bitcoin market insights from the experts at iShares.
iShares ETFs are available to purchase through a brokerage account or with a financial advisor.
Contact a financial professional to discuss how iShares ETFs can fit in your investment porfolio.
iShares Funds are available through online brokerage firms. All iShares ETFs trade commission free online through Fidelity.
By clicking on the button below, you will leave iShares.com
Carefully consider the Funds' investment objectives, risk factors, and charges and
expenses before investing. This and other information can be found in the Funds' prospectuses or, if
available, the summary prospectuses, which may be obtained by visiting the iShares ETF and BlackRock
Fund prospectus pages. Read the prospectus carefully before investing. Investing involves risk,
including possible loss of principal.
Before engaging Fidelity or any broker-dealer, you should evaluate the overall fees and charges of the
firm as well as the services provided. Free commission offer applies to online purchases of select
iShares ETFs in a Fidelity account. The sale of ETFs is subject to an activity assessment fee (from
$0.01 to $0.03 per $1,000 of principal). For iShares ETFs, Fidelity receives compensation from the ETF
sponsor and/or its affiliates in connection with an exclusive long-term marketing program that includes
promotion of iShares ETFs and inclusion of iShares funds in certain Fidelity Brokerage Services
platforms and investment programs. Please note, this security will not be marginable for 30 days from
the settlement date, at which time it will automatically become eligible for margin collateral.
Additional information about the sources, amounts, and terms of compensation can be found in the ETF’s
prospectus and related documents. Fidelity may add or waive commissions on ETFs without prior notice.
The Funds are distributed by BlackRock Investments, LLC (together with its affiliates, “BlackRock”).
iCRMH0424U/S-3441802
Our Funds
ASSET CLASS
PRODUCT RANGE
Investment Strategies
EXPLORE NOW
GET STARTED
GO FURTHER
Market Insights
EXPLORE NOW
MARKET INSIGHTS
ETF FLOWS
Education
INDEX INVESTING
INTRODUCTION TO INVESTING
Resources
DOCUMENTS
Institutional Investors
EXPLORE NOW
INVESTMENT STRATEGIES
INSIGHTS & SERVICES
About Us
GET TO KNOW iSHARES
iShares unlocks opportunity across markets to meet the evolving needs of investors. With more than twenty years of experience, iShares continues to drive progress for the financial industry. iShares funds are powered by the expert portfolio and risk management of BlackRock.
© 2024 BlackRock, Inc. All rights reserved.
1Source: CoinGecko, as of March 19, 2024. Bitcoin predominance based on its market capitalization of $1.3T, which accounts for greater than 50% of the total market capitalization of all cryptoassets, excluding stablecoins.
2There 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.
3Bloomberg, BlackRock calculations as of Jan, 2, 2024. Bitcoin returns and drawdowns calculated using Bloomberg Bitcoin Spot Price. Past performance does not guarantee future results.
This information must be preceded or accompanied by a current prospectus. Investors should read it carefully before investing.
Investing involves a high degree of risk, including possible loss of principal. An investment in the Trust is not suitable for all investors, may be deemed speculative and is not intended as a complete investment program. An investment in Shares should be considered only by persons who can bear the risk of total loss associated with an investment in the Trust.
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.
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.
Shares of the Trust are not deposits or other obligations of or guaranteed by BlackRock, Inc., and its affiliates, and are not insured by the Federal Deposit Insurance Corporation or any other governmental agency. The sponsor of the trust is iShares Delaware Trust Sponsor LLC (the “Sponsor”). BlackRock Investments, LLC ("BRIL"), assists in the promotion of the Trust. The Sponsor and BRIL are affiliates of BlackRock, Inc. The Bitcoin Custodian is Coinbase Custody Trust Company, LLC, which is not affiliated with BlackRock, Inc. The Sponsor is not responsible for losses incurred due to loss, theft, destruction, or compromise of the trust's bitcoin.
© 2024 BlackRock, Inc or its affiliates. All Rights Reserved. BLACKROCK, iSHARES, iBONDS, LIFEPATH, ALADDIN and the iShares Core Graphic are trademarks of BlackRock, Inc. or its affiliates. All other trademarks are those of their respective owners.
iCRMH0424U/S-3378637