ETF Talk: Bitcoin Is IBIT of a Trend

If there’s one commodity that’s on every investor’s mind as of late, it has to be Bitcoin.

Bitcoin has been making huge waves in both the market and the news, with the latest headline reporting it hit a record high of $72,000 on Monday. With high inflation a continuing threat in 2024, hedge investments such as Bitcoin have been experiencing a rebound, with some experts speculating that its value could reach up to $100,000 during the next year.

Adding to the excitement is the recent introduction of Bitcoin exchange-traded funds (ETFs), including one that recently amassed over 200,000 BTC in assets — the iShares Bitcoin Trust (IBIT).

Opened in January of this year by BlackRock, Inc., this fledgling ETF has already carved out a comfortable spot for itself in the market. IBIT is a passively managed fund that seeks to track the spot price of Bitcoin, with the intention of providing investors with easy access to the cryptocurrency, without the hassle of having to acquire, hold and trade it directly.

IBIT is backed by Bitcoin held in what is known as “cold storage.” Cold storage is a safeguarding method that generates and stores private keys corresponding to the trust’s Bitcoins offline, making them more resistant to hacking.

The trust’s holdings are valued daily based on the CF Benchmarks Index, which tracks the once-a-day benchmark rate of Bitcoin’s price in U.S. dollars. The index aggregates the trade flow of several Bitcoin platforms during its observation window with a focus on transactions the index provider finds relevant.

Currently, the fund has an expense ratio of 0.12%, and $13.58 billion in assets under management. Plus, 100% of the fund’s holdings are in Bitcoin, making the trust’s sole investment focus on the cryptocurrency. This is excellent for investors looking for an easy way to invest in Bitcoin.

Courtesy of www.stockcharts.com

As of March 11, the trust is up an astounding 51.45% in the past month. Since the ETF launched recently, IBIT does not yet have a three-month or a year-to-date performance listed.

While Bitcoin is currently all the rage, it might not be the right investment choice for your portfolio. Before jumping into any investment, trend or not, you should always consider your investment goals and do your due diligence before adding any stock or exchange-traded fund (ETF) to your portfolio.

As always, I am happy to answer any of your questions about ETFs, so do not hesitate to email me. You may see your question answered in a future ETF Talk.