BlackRock Is Building a Bitcoin ETF for Investors Who Can't Stomach the Swings
Is Bitcoin's wild volatility keeping you on the sidelines? BlackRock is building a new buffered ETF designed to smooth out the crypto ride.
BlackRock is developing a Bitcoin ETF called the iShares Bitcoin Managed Protection ETF (PBIT) to cater to investors who find Bitcoin's volatility too high. The prospectus, filed with the SEC on October 19, outlines a structured approach to Bitcoin investment using options. PBIT would not hold Bitcoin or other Bitcoin-related assets directly but would combine call options with short-term, high-quality debt.
The fund's exposure is built in overlapping tranches lasting roughly three months each, with interest from cash holdings offsetting option costs. Each tranche starts with a 10% floor, measured from its starting price. If Bitcoin rallies, investors could lose more than 10% before the floor kicks in. This new fund will join BlackRock's existing Bitcoin lineup, which includes the iShares Bitcoin Trust (IBIT), the largest spot Bitcoin ETF.
PBIT's structure and tax strategy, while aimed at protecting investors from extreme losses, could also lead to increased fees for BlackRock and its affiliates. Investors should carefully consider the ETF's fees, tax implications, and the trade-off between upside and downside protection before investing.
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