In a big sign of changing investor sentiment, BlackRock’s Bitcoin ETF is now making more money in annual fees than the company’s S&P 500 fund.
According to Bloomberg, the iShares Bitcoin Trust (IBIT), which launched in January 2024, has become a revenue machine for the world’s largest asset manager.
Despite having far fewer assets than the iShares Core S&P 500 ETF (IVV), IBIT’s higher fee structure is generating more revenue.
IBIT charges 0.25% expense ratio while IVV charges 0.03%. That may not seem like a big difference but it adds up. IBIT is now making about $187.2 million in annual fees just ahead of IVV’s $187.1 million even though IVV has $624 billion in assets vs IBIT’s $70-75 billion.
“IBIT overtaking IVV in annual fee revenue is reflective of both the surging investor demand for Bitcoin and the significant fee compression in core equity exposure,” said Nate Geraci, president of NovaDius Wealth Management.
In other words, more investors are willing to pay higher fees for bitcoin than for broad exposure to the U.S. stock market—a big shift considering bitcoin’s history of volatility.
Since its launch 18 months ago, IBIT has grown rapidly. It’s now the largest and most actively traded bitcoin ETF. It controls over 55% of the total market share in U.S. spot bitcoin ETFs and has seen inflows almost on a daily basis.
According to Farside data, IBIT has seen $52-54 billion in inflows since launch. It now has over $70 billion in AUM.
“It’s an indication of how much pent-up demand there was for investors to gain exposure to Bitcoin as part of their overall portfolio without having to open a separate account somewhere else,” said Paul Hickey, co-founder of Bespoke Investment Group.
IBIT shows Wall Street is no longer on the sidelines when it comes to bitcoin. Institutional investors—hedge funds, pension funds, and banks—are pouring capital into bitcoin ETFs now that they are approved in the U.S.
Related: Abu Dhabi Invests $437 Million in BlackRock’s Bitcoin ETF
Digital assets entrepreneur Anthony Pompliano said on X, “Bitcoin has Wall Street’s full, undivided attention now.”
And it’s not just attention – it’s real money. The large inflows into IBIT show institutional investors are getting comfortable with bitcoin as part of their portfolio.
This comfort was put on display during the recent geopolitical tensions in the Middle East, during which U.S.-listed bitcoin ETFs continued to absorb capital.
It may be due in part to BlackRock, a well-known name in finance, offering a way to invest in bitcoin through traditional systems.
“Although spot Bitcoin ETFs are priced very competitively, IBIT is proof that investors are willing to pay up for exposures they view as truly additive to their portfolios,” said Geraci.
For years, low-cost index funds like IVV have ruled the roost. But now, higher-fee bitcoin products like IBIT are out-earning the big boys.
Larry Fink, CEO of BlackRock, has also come around on Bitcoin. He used to be a skeptic, now he calls bitcoin “digital gold” and thinks it’s a hedge against inflation and currency debasement.
He even said that if sovereign wealth funds put just a small piece (2-5%) of their portfolio into bitcoin the price could go to $700,000 per coin.
