BlackRock Builds A Bitcoin ETF With A Ceiling On Gains And A Floor On Losses

BlackRock has filed for a Bitcoin (BTC) exchange-traded fund that aims to limit initial losses to roughly 10% per options tranche, while giving up some upside.

Key Points:

BlackRock filed Oct. 19 for the iShares Bitcoin Managed Protection ETF under the ticker PBIT.

The fund would use options tied to IBIT plus cash and short-term debt, without holding Bitcoin directly.

The SEC has not approved the product, and the filing warns investors could still lose money.

BlackRock PBIT Filing

The world's largest asset manager filed with the U.S. Securities and Exchange Commission on Oct. 19 to launch the iShares Bitcoin Managed Protection ETF, which would trade as PBIT. The fund would not hold Bitcoin or Bitcoin exchange-traded products. Instead, it would trade options tied to the iShares Bitcoin Trust, or IBIT, and keep the rest in cash, money market funds and short-term investment-grade debt.

PBIT would typically spread its exposure across three overlapping options tranches, with one expiring and a new one starting each month, and would mainly rely on FLEX options, exchange-traded contracts with customizable terms. Each tranche would buy calls struck near 90% of IBIT's starting value and sell higher-strike calls, which caps gains but helps pay for the protection.

That sets an initial loss floor of about 10% per tranche, before fees. The filing stresses that the floor is not fixed, and losses can exceed it if Bitcoin rises after a tranche begins and later drops. The management fee remains blank, and the proposed effective date falls 75 days after the filing, although the preliminary prospectus bars any sales until registration takes effect.

Also Read: Bitcoin Holds $80,000: A Pause Before Challenging $87,000?

Seyffart Flags Trade-Off

Bloomberg Intelligence senior analyst James Seyffart described PBIT as a buffer ETF, meaning buyers accept less upside in return for some protection against losses. He noted it is BlackRock's third Bitcoin ETF filing and that the firm still offers only Bitcoin and Ethereum (ETH) products.

Seyffart said the product will be a 40 Act fund that buys and writes options around IBIT to produce defined outcomes. He also pointed to similar buffered Bitcoin funds already offered by Calamos and First Trust. The filing itself concedes PBIT could badly trail IBIT in a rally while still absorbing losses, and it warns that extreme volatility could shrink both the upside and the protection.

BlackRock Bitcoin Lineup

PBIT would join a lineup BlackRock has been building since it launched IBIT in January 2024. The spot fund held about $65 billion in net assets as of Oct. 16, based on the company's published figures, and it serves as the reference asset for PBIT's options.

In January, the firm sought approval for a Bitcoin income fund that sells covered calls on its exposure. That product debuted June 16 as the iShares Bitcoin Premium Income ETF, or BITA, which trades some upside for monthly income. PBIT would point the same options toolkit at protection rather than payouts.

Diego Martin

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