BlackRock’s Bitcoin ETF now earns more annual fees than its S&P 500 ETF

BlackRock is making more money from Bitcoin than from the S&P 500. No one expected it to happen this fast, but now it has.

The $75 billion iShares Bitcoin Trust ETF (IBIT) is generating more annual fee revenue than the $624 billion iShares Core S&P 500 ETF (IVV). The numbers are clear: IBIT brings in $187.2 million a year, just above the $187.1 million IVV earns. This comes from Bloomberg data calculated as of July 1.

The reason this is happening? Fees. IBIT charges a 0.25% expense ratio, while IVV only charges 0.03%. And despite being almost nine times smaller, IBIT has drawn steady inflows in 17 out of the last 18 months, mostly from a mix of regular investors and huge institutions. BlackRock didn’t say anything when asked to comment, but the revenue shift speaks for itself.

Bitcoin fund takes control of ETF cash

Since spot Bitcoin ETFs launched in January 2024, IBIT has pulled in $52 billion out of the $54 billion in total inflows across all Bitcoin ETFs. That gives it control of more than 55% of the total market, based on Bloomberg’s figures. It’s already one of the top 20 ETFs by trading volume.

Paul Hickey, co-founder of Bespoke Investment Group, said this showed how much investors wanted easy Bitcoin access without dealing with new platforms.

“It’s an indication of how much pent-up demand there was for investors to gain exposure to Bitcoin as part of their overall portfolio without having to open a separate account somewhere else,” he said.

Hickey also pointed out how Bitcoin has completely outpaced smaller altcoins in how it’s seen by investors, as the clear store of value.

Nate Geraci, president at NovaDius Wealth Management, said IBIT passing IVV in revenue shows two things: people want Bitcoin, and stock ETF fees are shrinking. “Although spot Bitcoin ETFs are priced very competitively, IBIT is proof that investors are willing to pay up for exposures they view as truly additive to their portfolios,” Nate said.

The IBIT and IVV combo could help BlackRock pass State Street in overall ETF trading. Right now, BlackRock handles 25% of ETF trading by dollar volume, with State Street ahead at 31%, based on Bloomberg Intelligence numbers shared by Athanasios Psarofagis.

Bitcoin’s rise has also been backed by Wall Street, especially Michael Saylor’s Strategy, which has spent billions buying the coin outright. Hedge funds are also going after convertible debt linked to Strategy, using trades that involve shorting the stock while holding the bonds.

Bitcoin stays stable while traders adjust

But while the money keeps flooding in, Bitcoin’s price hasn’t been moving much lately. In the last two months, it’s been stuck in a range between $93,000 and $111,000, one of the tightest stretches in years. It was trading at around $108,480 on Wednesday, up about 2.4%.

The low volatility is a major change from the wild swings of past years, when the price could move 5% or more in a single day. This quiet period is backed by the Deribit BTC Volatility Index, which tracks expected 30-day price swings. It’s now at the lowest level in two years.

Michael Longoria, a research analyst at GSR, said this signals a change in how Bitcoin is viewed. “Bitcoin is becoming less speculative and more akin to a volatile macro asset,” he said.

With volatility down, traders looking to profit from big moves are seeing fewer chances. Some investors have shifted to writing call options on Bitcoin they already own, which gives them some income while limiting how far the price can move.

David Lawant, head of research at FalconX, said this kind of trading is now common. “These are kind of covered call overwriting strategies, and they basically have the effect of lowering volatility,” David said.

He added that in the past, most options investors were looking for leverage and quick upside. But now, more are focused on controlling risk and earning steady returns.

This calmer market fits with who’s in control now. A report from Glassnode shows that while transaction volume is going down, settlement value is going up. That means fewer trades, but each one carries more value. More high-net-worth players are holding large positions, while individual traders are stepping back.

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