BlackRock filed a final amendment for its iShares Bitcoin Premium Income ETF (BITA), signaling an imminent launch. The fund will use a covered-call strategy to generate yield and will charge a 0.65% fee, undercutting rivals. BlackRock is racing to market against a similar product from Goldman Sachs, which is expected to launch around July 1.
BlackRock Bitcoin Income ETF
- ▪The iShares Bitcoin Premium Income ETF is expected to trade on the Nasdaq under the ticker symbol BITA
- ▪BlackRock filed the fourth amendment for its proposed iShares Bitcoin Premium Income ETF
- ▪Bloomberg ETF analyst Eric Balchunas described the amendment as "probably final" and expects the fund to launch soon
- ▪The BITA fund will hold a mix of spot Bitcoin, shares of BlackRock’s iShares Bitcoin Trust (IBIT), and cash
Covered-call options income strategy
- ▪The fund plans to write call options on 25% to 35% of its value at a time
- ▪The BITA ETF is designed to generate income for investors through an actively managed covered-call options strategy
- ▪The fund's strategy involves selling monthly call options on its holdings of the IBIT ETF to collect option premiums
- ▪In exchange for steady income, the covered-call strategy caps the fund's upside potential if Bitcoin's price rallies sharply
65 basis point fee
- ▪The latest filing for the BITA ETF disclosed a sponsor's fee of 0.65%, or 65 basis points
- ▪BITA's 0.65% fee is lower than the fees of the two largest existing covered-call bitcoin ETFs, which charge 0.95% and 0.99%
Competition with Goldman Sachs
- ▪BlackRock is competing with Goldman Sachs to be the first to launch a major yield-paying Bitcoin ETF
- ▪Goldman Sachs filed for its own Bitcoin Premium Income ETF in April and its fund is expected to go live around July 1
Bitcoin ETF market consolidation
- ▪BlackRock's existing spot bitcoin fund, the iShares Bitcoin Trust (IBIT), is the largest of its kind with approximately $47 billion in assets
- ▪The U.S. spot bitcoin ETF market has largely become a "two-firm race" between BlackRock's IBIT and Fidelity's FBTC
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