The BlackRock Bitcoin ETF has become the world's most successful currency in record time with 10 billion US dollars. For many investors, it has not turned into a fever that has driven the price of the cryptocurrency to a record high. The acceptance of these products and corresponding capital inflows have never been as massive as at the beginning of the year. Since January 11th of this year, investors have put historically large sums of money into the 10 US-based Bitcoin exchange-traded funds, increasing the total capital to almost 50 billion US dollars.

Already on Thursday, the BlackRock iShares Bitcoin Trust reached a value of 10 billion US dollars — and it has never happened before that a new ETF reached this mark so quickly. Fidelity's fund, with its more than 6 billion US dollars in capital, was already the third-largest of the investment management at that time and was responsible for the majority of customer funds that were reallocated at the beginning of the year.

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"It's a Sustained Wave of Demand: These Products Have Taken Off Strongly and Remained Strong," commented Todd Rosenbluth, Head of VettaFi Research. The funds allow ordinary investors to purchase digital assets through their brokerage accounts without having to go to a cryptocurrency exchange or funds that track the price of Bitcoin through futures contracts. Some analysts predicted that the large capital inflows into the funds would flatten out at the beginning, but instead, the pace of inflows has accelerated in recent weeks as Bitcoin prices surged to record levels.

On Monday afternoon, Bitcoin was traded for more than $67,000, just below its November 2021 peak of $68,990.90. A year ago, the currency ended trading at around $40,000, and two years ago, it was at about $23,000. Many analysts attributed Bitcoin's upswing in the second half of last year to the expectation that ETFs would be approved. Now they say that the funds' acceptance by investors is leading to greater confidence and simultaneously creating new demand.

This BlackRock Fund is Already in Rarefied Air: According to Bloomberg Intelligence, only about 4% of the more than 3,000 listed US ETFs hold more than $10 billion in assets in BlackRock's Bitcoin Fund. Nine of the Bitcoin Funds were new to the market in January, while Grayscale's Bitcoin Trust was converted into an ETF and already had around 30 billion US dollars in assets when other funds were launched.

Since then, investors have withdrawn more than $8 billion from this fund, which charges a significantly higher fee than the competition. Grayscale's annual fee of 1.5% would generate about $400 million in annual revenue for the asset manager if the fund's average assets remain at current levels. BlackRock charges 0.25% after the promotional period, while most smaller asset managers demand even lower fees.

Not All Asset Managers Consider Products Suitable for Private Investors Due to Bitcoin's Volatility. For instance, Vanguard has stated that it has no plans to offer a Bitcoin ETF and will not offer crypto-related products on its brokerage platform. The giant asset manager described Bitcoin in a recent blog post as "more speculation than investment." Advisors, who play a key role in allocating capital to ETFs, currently have limited access to Bitcoin funds.

The Wealth Management Platforms of Morgan Stanley, Merrill Lynch, UBS, and Wells Fargo Offer the Funds on an Unsolicited Basis — Advisors Cannot Proactively Market the Products to Their Clients, However, They Can Purchase Them Upon a Client's Request. Should This Change, Analysts Expect More Capital Inflows. "The Advisors' Platforms Have Avoided the Sector Because They Didn't Have an SEC-Regulated Product," Explained Aniket Ullal, Head of ETF Data and Analysis at CFRA Research. "If Something Changes, We Expect Higher Demand."

Some of the New Bitcoin Funds Are in Direct Competition With the Heavyweights of Other Asset Classes Regarding the Inflow of New Funds. BlackRock's Bitcoin Fund Contributed the Third Largest Inflow to American ETFs in February, Just Barely Surpassing the Largest S&P 500 ETF. Fidelity's Bitcoin Fund was Number 8. (The Most Popular Funds in February Were Vanguard's S&P 500 and Information Technology.)

At the moment, however, there is still a lack of data on the actual buyers of the funds. After the quarterly reports of major investors, Wall Street will know more about the funds they hold. However, trading has accelerated in recent months. On a single day, Wednesday, around $8 billion in shares changed hands; it was the biggest day so far, according to Bloomberg Intelligence. "The speed at which investors have adopted these funds has been a surprise. It's an unusual situation," Ullal commented, who also added that it usually takes much longer for ETFs to attract money while they wait to be listed on various advisory platforms.