BlackRock launches BITA ETF: swaps upside for double-digit yield

BlackRock launched the iShares Bitcoin Premium Income ETF, which will trade on the Nasdaq under the ticker BITA. The fund holds a mix of direct Bitcoin and shares of BlackRock’s iShares Bitcoin Trust (IBIT).

BITA generates monthly cash distributions by selling covered call options on up to 35% of its holdings. Option buyers pay premiums for the right to purchase the fund’s IBIT shares at a set strike price if Bitcoin rises.

BlackRock plans to distribute those option premiums to investors each month. Under current market conditions, Robert Mitchnick, head of digital assets at BlackRock, projects the product would offer a mid-to-high-teens yield.

Mitchnick described BITA as “a hybrid Bitcoin exposure product” that combines partial participation in Bitcoin’s upside with regular income from option sales. He estimated investors would retain roughly 70% of upside exposure through IBIT while receiving the yield.

The fund limits options writing to no more than 35% of the portfolio to balance income generation and retained price exposure. Because Bitcoin has shown high volatility, option premiums are generally higher than on less volatile assets, allowing the ETF to capture income even when some upside is capped by exercised calls.

BlackRock filed for BITA in January and announced the listing on Nasdaq in a Tuesday press release. The firm’s IBIT holds about $48.6 billion in assets and will be used alongside direct Bitcoin holdings in the new fund.

BITA will compete with existing yield-oriented crypto products, including the NEOS Bitcoin High Income ETF, and follows an April filing from another large financial firm for a similar yield-generating Bitcoin product.

BlackRock has launched spot-Ethereum ETFs and staking-based offerings, but the firm does not plan an options-based Ethereum product because one of its Ethereum offerings already provides yield through staking.

Covered-call strategies cap upside beyond option strike prices for the portion of the portfolio under option while funding regular distributions from premiums. The yield and the amount of retained upside for BITA will vary with Bitcoin volatility and option pricing at the time of each monthly options trade.