Behind BlackRock’s Proposed Bitcoin Premium Income ETF

If anyone can take on BlackRock, it might just be BlackRock itself.

BlackRock has effectively cornered the market for spot bitcoin ETFs, with the iShares Bitcoin Trust ETF (IBIT) becoming one of the fastest-growing funds of all time. Now, the world’s largest asset manager is looking to build on that dominance with the iShares Bitcoin Premium Income ETF, an actively managed product designed to hold primarily bitcoin while generating additional income through call options. The premium income offering would sell call options on IBIT shares and indices that track spot bitcoin exchange-traded products. The strategy is aimed at investors who want crypto exposure, but are wary of the extreme volatility that comes with holding bitcoin directly.

“It’s not quite a buffered fund, but you are going to get a smoother ride,” said James Seyffart, a senior research analyst at Bloomberg Intelligence. “That being said, you are going to get a little less of an explosive upside when bitcoin rocks higher.”

Compare and Contrast

Details including a ticker, management fees and custodians have yet to be disclosed, which is typical for early S-1 regulatory filings. However, existing bitcoin option-income ETFs provide some context. Similar products launched in 2024 include the NEOS Bitcoin High Income ETF (BTCI), the Bitcoin Covered Call Strategy ETF (YBTC) and the YieldMax Bitcoin Option Income Strategy ETF (YBIT):

• All three funds carry expense ratios just under 1%. Those calls don’t come cheap.
• BTCI is the largest of the group, with just over $1 billion in net assets. YBTC and YBIT trail far behind, with approximately $211 million and $67 million in AUM, respectively.

• Over the past 12 months, BTCI is down roughly 30%, YBTC has fallen about 45% and YBIT has dropped nearly 50%.

“If you look at periods where bitcoin is sideways or down, these funds should outperform if they’re operated properly,” Seyffart told Advisor Upside. BlackRock declined to comment.

Think Big-ish. BlackRock is widely viewed as operating on a different scale altogether, with IBIT alone holding nearly $70 billion in assets, far outpacing the next-largest spot bitcoin ETF, Fidelity’s Wise Origin Bitcoin Fund (FBTC), at roughly $18 billion. While Seyffart doesn’t expect the premium income fund to approach IBIT’s size, he believes demand will be there. “There’s definitely a subset of investors who are looking for something exactly like this,” he said.