Over the past year, the Bitcoin exchange-traded fund (ETF) boom has been hailed as proof that Wall Street is finally embracing cryptocurrencies. But the numbers reveal something far more vulnerable.
On October 28, Vettle Runde, head of research at K33 Research, noted that US-traded Bitcoin ETFs have attracted approximately $26.9 billion in inflows since the beginning of the year.
But this headline number hides a glaring imbalance, with BlackRock’s iShares Bitcoin Trust (IBIT) alone accounting for about $28.1 billion of these flows.
In other words, without IBIT, Bitcoin ETFs would see net outflows this year. This constant accumulation of product has single-handedly offset competitor redemptions, keeping total inflows positive and sustaining Bitcoin’s institutional adoption story.
Market hosted by one fund
Since its founding in early 2024, IBIT has dominated every major performance indicator in the ETF ecosystem.
According to data from SoSo Value, it has had lifetime inflows of approximately $65.3 billion, compared to $21.3 billion for all other Bitcoin funds combined.
Meanwhile, Grayscale’s GBTC is struggling with redemptions of about $24.6 billion, confirming that without IBIT, the overall situation will be very negative.
This effectively means that BlackRock’s IBIT size is on a unique level.
The fund raised $37 billion in its founding year and will add another $28 billion by 2025, bringing its total assets under management to more than $90 billion, well ahead of its competitors.
According to data from Coinperps, Bitcoin ETFs hold around 1.3 million BTC in total, with IBIT accounting for more than 60% of that total.
Why was BlackRock’s IBIT able to monopolize?
A significant part of IBIT’s growth can be tied to the fact that BlackRock has leveraged its $12.5 trillion in assets under management, retail brokerage channels, and institutional relationships to drive demand into a single flagship product.
Asset managers’ entry into the emerging industry lent instant legitimacy to a sector still reeling from a widespread crisis of confidence.
Eric Balchunas, ETF analyst at Bloomberg, said:
“When BlackRock filed for IBIT, the price was $30,000, and the stench of FTX was still in the air. Now it’s $110,000 (or more) (seven times the return of the mighty S&P 500) and is now considered legitimate by other large investors.”
Separately, the fund’s recent success may also be related to how Bitcoin has changed BlackRock’s investor base.
The company revealed last year that three out of four IBIT investors were completely new to BlackRock’s iShare product suite.
This shows that IBIT is no longer just a crypto ETF, but a customer acquisition engine for the world’s largest asset management company.
In fact, the asset manager’s custom-created mechanism is becoming increasingly popular among large Bitcoin holders, or “whales,” who were once wary of traditional financial institutions. These mechanisms allow investors to bypass the need to sell on the open market and transfer their Bitcoin directly to an ETF in exchange for new shares.
The company has reportedly processed more than $3 billion in such in-kind transfers to date, reflecting strong confidence in the company’s custody design and long-term exposure model.
This strong advantage created a halo effect that proved extremely beneficial for BlackRock.
IBIT is less than a year old, but it’s already ranked among BlackRock’s top 10 returners, outperforming long-standing funds like the iShares Russell 1000 Growth ETF.
What happens when the flow slows down?
IBIT’s dominance in the Bitcoin ETF space begs the question of what will happen when its numbers eventually slow down.
If inflows into IBIT taper off, the impact will be immediate on overall market liquidity and price stability. At the current scale, even a small decline in purchases could remove a significant source of stable demand. This demand acts as a quasi-monetary inflow, offsetting miner selling pressure and exchange outflows.
A slowdown would therefore widen spreads on US spot exchanges, reduce arbitrage opportunities for market makers, and weaken the feedback loop that has kept Bitcoin prices above key support levels. Essentially, the ETF’s bid is a floor for Bitcoin, with IBIT accounting for the majority of that bid.
The ripple effect will also spread to organizational psychology.
If month-over-month flows turn negative, family offices and RIA desks that benchmark their performance against IBIT may rebalance out of Bitcoin ETFs entirely. This withdrawal will reduce the “liquidity premium” currently built into the price of Bitcoin.
Finally, if IBIT inflows continue to stagnate, Bitcoin’s dominance could be eroded as capital shifts to Ethereum and newly launched altcoin ETFs.
However, Lunde noted that BlackRock’s lack of participation in these product suites could limit overall net flows.
(Tag translation) Bitcoin
