BlackRock launches bitcoin income ETF BITA on June 16

BlackRock listed the iShares Bitcoin Premium Income ETF, ticker BITA, on Nasdaq on June 16. The fund targets a 15-25% annual yield by writing covered calls and BlackRock filed the ETF’s Form 8-A with the SEC on June 11, ahead of a similar product expected from Goldman Sachs in early July.

BITA is an actively managed covered-call fund. It holds bitcoin exposure through direct bitcoin custodied primarily at Coinbase and through shares of BlackRock’s existing spot bitcoin ETF, IBIT. Fund managers sell call options primarily on IBIT shares and collect option premiums. BlackRock expects to distribute option income to shareholders monthly and set an expense ratio of 0.65% for the fund.

BlackRock has stated the fund will seek to capture at least 70% of bitcoin’s upside while generating the stated yield. The covered-call strategy gives investors option premium income and participation in bitcoin price gains up to the strike price of sold calls. Returns above the strike price are capped in sharp rallies. Option premiums tend to fall when market volatility is low, and the fund will retain most of bitcoin’s downside exposure; option income provides only partial protection against price declines.

Target investors include retirees, registered investment advisors managing yield-oriented portfolios, and institutions with income mandates. Investors who want full, uncapped bitcoin upside can continue to hold IBIT or direct bitcoin, since the covered-call approach limits participation in large price advances.

Other issuers offer covered-call bitcoin funds. Competing bitcoin income products commonly charge fees in the 0.95% to 1.00% range, while IBIT’s fee is 0.25%. BlackRock’s integration of BITA with IBIT and its distribution network are structural facts about the product and its platform.

ETF analyst Eric Balchunas confirmed the launch on social media and highlighted the fund’s 15-25% yield target and its aim to capture at least 70% of bitcoin’s price appreciation. In its SEC filing, BlackRock wrote that the fund “seeks to reflect generally the performance of the price of bitcoin while providing premium income through an actively managed strategy of writing (selling) call options primarily on IBIT shares.”

Potential investors should note the yield target is not guaranteed. Option premiums depend on market volatility and the terms of sold calls, so income may vary. The fund will be actively managed to allocate between direct bitcoin holdings and IBIT shares as managers write and roll call options.