BlackRock Files for 'Buffer' Bitcoin ETF as IBIT Draws $665M in a Day

BlackRock has filed to launch a "buffer" Bitcoin ETF that would cap investors' gains in exchange for limiting their losses, according to a filing with the Securities and Exchange Commission on Monday.

The iShares Bitcoin Managed Protection ETF, which would trade under the ticker PBIT, "seeks to provide upside exposure to the iShares Bitcoin Trust ETF (IBIT) and/or similar bitcoin exposure up to an approximate limit, while seeking to provide a level of downside protection," the filing says. The management fee has not yet been filled in.

The fund would not hold Bitcoin or Bitcoin ETFs directly. Instead, it would buy call options on IBIT or similar Bitcoin exposure and sell higher-priced calls to help cover the cost, in three overlapping tranches with staggered monthly start dates, so that one tranche expires and a new one begins each month. It would also hold fixed-income investments to earn interest.

Each tranche's protection typically starts at about 90% of the reference asset's value, limiting its initial losses to roughly 10% before fees, according to the filing. The cap on gains is set by market conditions at the start of each tranche, and the fund has broad discretion to change both, so investors should not expect a fixed outcome.

The fund would be registered under the Investment Company Act of 1940, the law that governs most mutual funds and ETFs, as part of the iShares Trust. It is BlackRock's third Bitcoin ETF filing, Bloomberg Intelligence analyst James Seyffart noted, and the asset manager still offers crypto products only for Bitcoin and Ethereum.

Buffered Bitcoin ETFs are not new. Calamos, First Trust and Innovator already offer defined-outcome funds tied to Bitcoin, but Seyffart said that when BlackRock moves in this space, it "tends to make a big splash."

BlackRock’s IBIT leads Bitcoin ETF flows

The filing came as BlackRock’s IBIT, the largest spot Bitcoin ETF with $66.37 billion in net assets, took in $665.2 million on Monday, according to SoSoValue. It was the only fund of the 12 to post net inflows, as Fidelity's FBTC lost $83.6 million and Grayscale's GBTC $54.9 million, leaving total net inflows of $526.6 million for the day.

Monday's inflow followed a run of selling, in which U.S. spot Bitcoin ETFs shed about $910 million over the previous two weeks, including $228.6 million last week and $681.1 million the week before, as hotter-than-expected inflation data revived bets on another Federal Reserve rate hike. Through Friday, the funds were down about $615 million for October.

Since launching in January 2024, the funds have drawn $57.4 billion in cumulative net inflows and now hold $105.46 billion in net assets, according to SoSoValue.