The iShares Bitcoin Trust (IBIT) is BlackRock’s Bitcoin ETF that holds real Bitcoin. It gives investors price exposure without managing wallets or private keys. Launched in January 2024, it quickly became the largest Bitcoin ETF globally. For the second quarter of 2025, which ended on June 30, 2025, BlackRock reported an AUM of $12.53 trillion.
IBIT matters because it makes Bitcoin easy to access through normal brokerage accounts. Investors can buy it like a regular stock. This removes technical barriers for newcomers. Its rapid growth shows rising institutional confidence in digital assets.
In this article, we explain everything you need to know about IBIT. We cover how it works, its fees, performance metrics, and core risks. These insights help investors understand IBIT’s role in the market. This knowledge supports smarter decisions in the evolving crypto landscape.
What is iBIT?
IBIT is formally referred to as the iShares Bitcoin Trust ETF. It trades on the NASDAQ under the ticker symbol IBIT. The fund commenced trading on January 11, 2024, following the SEC‘s approval of spot Bitcoin ETFs. This was a momentous milestone for bitcoin integration into regular financial markets.
The fund only keeps actual Bitcoin in custody, not derivatives or futures contracts. As of July 2025, IBIT has over 700,000 BTC, accounting for more than 3.3% of Bitcoin’s entire supply. This makes it the largest institutional holder of Bitcoin ETFs. The fund also has cash reserves to cover daily operations and redemptions.
IBIT charges a sponsor fee of 0.25% per year on assets under management. BlackRock initially eliminated a portion of its costs for the first 12 months, decreasing them to 0.12% on the first $5 billion in assets. The fund uses the CME CF Bitcoin Reference Rate as its pricing benchmark. Since its inception, IBIT has received exceptional inflows of around $16.2 billion, shattering ETF growth records across all asset classes.
If you’re weighing the difference between buying Bitcoin directly or gaining exposure via a regulated ETF like IBIT, check out our guide on Bitcoin vs. Bitcoin ETF for key comparisons.
How iBIT Works?
IBIT tracks spot Bitcoin with direct physical holdings of the cryptocurrency. The fund’s Net Asset Value is determined daily using Bitcoin’s market price. The Trustee values the trust’s Bitcoin using the CF Benchmarks Index. This ensures that the ETF’s price accurately reflects Bitcoin’s current market value.
The creation and redemption method is run by authorised parties. When demand for IBIT shares rises, authorised participants deposit funds into the fund. The fund then buys Bitcoin on the spot market and issues fresh shares. When investors sell, the process reverses, keeping the price in line with Bitcoin’s worth.
Coinbase Prime is the custodian and primary broker for IBIT. Coinbase Prime, the world’s largest institutional digital asset custodian, stores Bitcoin in cold storage with multi-signature security methods. BlackRock also has its own Bitcoin node to independently verify holdings. This dual-layer verification adds security and transparency for investors.
Fees & Costs
IBIT’s management fee is 0.25% per annum. This works up to $25 each year for every $10,000 invested. While the charge is more than for regular equity ETFs, it reflects the complexities of crypto custody and regulatory regulations. The charge covers custody, security, and operational costs.
Due to the significant liquidity, IBIT’s trading costs remain small. IBIT trades relatively close to its net asset value (NAV) due to its high liquidity. The bid-ask spread is often around 0.02%, which means transaction costs are low. High daily trading volumes allow investors to buy and sell shares without significantly affecting the price.
The fund’s liquidity has a direct impact on overall costs for investors. Large institutional orders can be efficiently executed on a daily trading volume of billions. Retail investors benefit from narrow spreads and competitive pricing. Brokerage commissions may apply depending on the platform you use, however many brokers now provide commission-free ETF trading.
Performance & Flows
IBIT’s performance closely resembles Bitcoin’s price swings, minus the 0.25% annual charge. The ETF does not pay dividends because Bitcoin produces no income. All returns are derived from capital appreciation linked to Bitcoin’s market price. This means that as the price of Bitcoin rises, so do IBIT shares.
Image Description: Spot Bitcoin ETF On-chain Holdings in BTC
Image Source: The Block
IBIT achieved $70 billion in AUM in just 341 trading days, the fastest of any U.S. ETF. This remarkable expansion demonstrates significant institutional demand for regulated Bitcoin exposure. In the first week of October 2025, IBIT received around $3.5 billion in weekly inflows, indicating ongoing investor interest.
Recent inflow statistics indicate that institutional capital continues to pour into Bitcoin ETFs. On October 6, 2025, Bitcoin ETFs experienced their second-largest day inflows of $1.19 billion, with IBIT contributing $970 million. These large inflows boosted Bitcoin’s price and expanded market liquidity. The fund’s size and popularity propelled it to the forefront of the cryptocurrency market.
Risks & Considerations
Bitcoin price volatility is the major risk for IBIT investors. Bitcoin can see double-digit percentage changes in a single day. This volatility is directly related to IBIT’s share price changes. Investors must be prepared for severe short-term market swings and probable losses.
Even with strong security mechanisms in place, custody and counterparty risks persist.
Custody and counterparty risks exist despite robust security measures. While Coinbase Prime provides institutional-grade custody, no system is completely immune to hacking or operational failures. Insurance coverage protects against certain losses, but investors should understand these limitations. The prospectus details specific risk scenarios and insurance provisions.
Tracking errors and tax treatment complicate IBIT ownership. The fund’s 0.25% fee results in minor underperformance compared to holding Bitcoin directly. IBIT is subject to capital gains tax, just like any other ETF. When selling shares, you record gains or losses using standard tax forms rather than crypto-specific forms. Tax treatment for Indian investors may vary depending on local rules. Furthermore, the fund’s structure differs from that of ordinary registered investment organisations, which has an impact on investor protection.
A Practical Guide on How to Buy iBIT
IBIT is listed on NASDAQ, allowing access through nearly all brokerage accounts. Shares can be acquired via platforms such as Fidelity, Charles Schwab, Robinhood, or Interactive Brokers. To find the ticker “IBIT,” just enter it into the search function of your brokerage app. The process of buying is similar to that of purchasing any stock or ETF.
It is advisable to use limit orders instead of market orders to manage your entry price effectively. This helps avoid slippage during periods of market volatility. IBIT can be held in taxable brokerage accounts, IRAs, or 401(k) plans if your employer provides that option. Tax-advantaged accounts offer advantages for long-term investors by allowing for the deferral or elimination of capital gains taxes.
IBIT suits different investor types depending on their goals and risk levels. Long-term holders get Bitcoin exposure without dealing with custody. Active traders benefit from high liquidity and easy entry and exit.
Indian investors should check if their international broker supports NASDAQ access. They must also account for currency conversion costs and confirm local tax reporting rules. Always ensure your platform allows trading in U.S.-listed securities before investing.
iBIT vs Competitors
The spot Bitcoin ETF market features a number of robust competitors in addition to IBIT. Recognising the distinctions enables investors to select the most suitable fund for their requirements. A comparison of the major spot Bitcoin ETFs is presented below:
Ticker | Sponsor | Annual Fee | AUM (Approximate) | Bitcoin Holdings |
IBIT | BlackRock | 0.25% | $88-91 billion | 797,000+ BTC |
Fidelity | 0.25% | $20-22 billion | 196,000+ BTC | |
ARK/21Shares | 0.21% | $4-5 billion | 45,000+ BTC | |
Bitwise | 0.20% | $3-4 billion | 42,000+ BTC |
IBIT manages $88 billion, representing over 50% of the total assets within the roughly $160 billion Bitcoin ETF market. BlackRock’s leading position arises from its exceptional liquidity and strong institutional credibility. Fidelity’s FBTC ranks second, benefitting from notable brand recognition and competitive pricing strategies.
ARK’s ARKB attracts investors who have confidence in Cathie Wood’s knowledge of cryptocurrency. The sponsor has decided to waive its entire management fee from October 2025 until October 2026, resulting in it being the most affordable option during this period. Bitwise’s BITB features a competitive regular fee of 0.20% and emphasises transparency by providing daily disclosures of Bitcoin holdings.
IBIT is at the forefront of daily trading volume and offers the tightest bid-ask spreads. Large institutional investors executing sizable trades experience a significant advantage due to liquidity. The differences in fees among leading funds are minimal for retail investors. Select according to the sponsor you have confidence in and the platform that provides the most favourable access.
Market Impact & What Analysts Say
Large institutional ETFs such as IBIT have significantly transformed the Bitcoin market landscape. The addition of IBIT to BlackRock’s model portfolios signals to the broader investment community that digital assets are gaining mainstream acceptance. The recognition of this legitimacy has drawn the attention of pension funds, endowments, and financial advisors who had previously steered clear of direct exposure to cryptocurrencies.
Michael Saylor, Executive Chairman of MicroStrategy, remarked that “BlackRock’s IBIT will become the world’s largest ETF over the next decade.” His prediction indicates that Bitcoin is increasingly being recognised as a legitimate asset class. Eric Balchunas, a Senior ETF analyst at Bloomberg, described it as “the most successful ETF launch of the past 30 years.”
Recent analyst commentary emphasises the important role of IBIT in price discovery. The rally of Bitcoin in 2025 is notable for its structural integrity, characterised by lower leverage, improved positioning, and ongoing genuine demand. Consistent buying pressure from ETF inflows has supported higher prices. IBIT’s purchase of Bitcoin to support new shares directly affects the dynamics of supply and demand in the spot market. The buying power of institutions has contributed to Bitcoin’s stabilisation and appreciation.
The rapid expansion of Bitcoin ETFs is part of a broader trend in crypto asset management. Read our analysis on crypto asset management market size, share and trends to understand the bigger picture.
Conclusion
BlackRock’s IBIT makes Bitcoin exposure accessible to traditional investors by removing the complexities of wallets and private keys while offering a regulated, institutional-grade structure. However, it still reflects Bitcoin’s volatility, so investors should evaluate their risk tolerance before allocating funds. IBIT is a practical option for those who want straightforward BTC exposure without managing assets directly, but it remains important to understand the risks and invest with a long-term perspective.
Proper tax preparation is vital for those looking to diversify their portfolios. KoinX enables you to track your cryptocurrency assets and provide correct tax returns. Whether you trade IBIT or own other digital assets, KoinX makes crypto tax compliance easier. Sign up now to ensure you meet all reporting obligations while increasing your investment returns.
Frequently Asked Questions
Is IBIT Insured?
IBIT’s Bitcoin is stored with Coinbase Prime, which offers custody insurance for specific loss incidents. This insurance excludes coverage for price fluctuations or market losses. Please consult the most recent prospectus for the latest coverage information.
Does IBIT Own Real Bitcoin?
Yes, IBIT possesses real Bitcoin. More than 700,000 BTC are safeguarded in Coinbase Prime’s cold custody. Shares signify a portion of ownership in these tangible assets, rather than being derivatives.
Are Options Available on IBIT?
Yes, options trading is accessible on IBIT after receiving approval from the SEC and NASDAQ. These options can be utilised by investors for hedging or to enhance their trading strategies, contingent on broker availability.
How Are IBIT Fees Structured?
IBIT charges a management fee, which covers custody, administration, and operational expenses. While this fee is competitive compared to other Bitcoin ETFs, it still impacts overall returns. Investors should review the latest fee schedule in the official prospectus before making a decision.
Can I Redeem IBIT Shares for Actual Bitcoin?
No, IBIT does not allow direct redemption for Bitcoin. Investors can buy or sell shares through their brokerage accounts, but redemptions are settled in cash. This makes IBIT convenient for market exposure but unsuitable for those who want to hold actual BTC or have it in self-custody.
