BlackRock's Bitcoin ETF Is $13 Billion Underwater

**David Canellis** (0:00)
It is Wednesday, June the 10th. Welcome back to The Breakdown. I'm your host David Canellis. And this morning, I've got a few quick themes for you.
We're looking at ETFs again, but we're gonna zoom in to each ETF to understand, are they ahead on the crypto that they've bought? How are these funds doing at a material level from a profit and loss standpoint? We're gonna take a look at which funds might come under psychological pressure as we go forward through the Bitcoin bear market. We're also gonna be looking at pre-stocks, so pre-IPO perps ahead of SpaceX's IPO, which is happening over the next few days. We're gonna be taking a look at the market reaction leading up to what is said to be the biggest IPO of all time. So we're gonna be taking a look at that. We're also gonna have a quick preview into Blockworks Digital Assets Summit events for the rest of the year. So enough out of me. This is The Breakdown. Let's get to it.
The Breakdown is a recommendation to buy or sell securities or tokens. This podcast is for informational purposes only, and any views expressed by anyone on the show are opinions, not financial advice. Hosts and guests may hold positions in the company's funds or projects discussed. So first, I just want to explain what this is. It's just a little bit of fun. So like, I'm sure if you're browsing crypto headlines, you know, daily, weekly, whatever it is, you would see like the lower tier crypto media run headlines like BlackRock is selling this much of this cryptocurrency or whatever. And it's like, they're referring to ETF outflows. And okay, like on a functional level, and I know that there's in kind redemptions and so on these days, but on a conceptual level, it makes sense. You have BlackRock who is essentially the custodian. You have BlackRock who is essentially wrapping Bitcoin into an ETF wrapper and then selling that ETF wrapper to investors. And so when those investors dump their ETF holdings, it is technically BlackRock dumping their holdings, but it's actually the shareholders that are doing it. So, but what I've done here is I have taken the daily net flows for spot ETFs across Bitcoin, Ether and so on, and looked at the performance as if it was an actual fund, if it was just one homogenous entity that is deciding to buy and sell on these days, and trying to determine what is the profit and loss, what is the cumulative profit and loss for each Bitcoin ETF, because different ETFs have different shareholder profiles. So some, let's say Fidelity, they might really like buying the dip. So Fidelity's Bitcoin ETF might technically be in a much higher profit than what another ETF might be that has a class of shareholders that doesn't like buying the dip, that actually likes buying the top. And if those shareholders keep buying the top through the ETF wrapper, then they're going to be at a much deeper loss compared to other ETFs. So this is essentially what the analysis is. And it's just trying to understand like, is it, are BlackRock shareholders overall, are they ahead on their ETFs to date? Are they behind? So let's take a look. I have this up on my screen. I have a chart here. And if again, if you're just listening to audio, I'm going to do my best as always. So what we're looking at, the price of Bitcoin is in the yellow line here, the yellowish line. And if you're a fund, whether you're an ETF or not, like the whole game is to beat the underlying asset, right?
So what we can actually see is that BlackRock's iBit is actually heavily underwater in terms of its Bitcoin holdings.
I'm going to flip to another chart that zooms in specifically on to iBit. So you can see the relationship between its profit and loss and its net flows. So you can actually see that iBit in the blue here is actually the worst performing ETF of the bunch. In terms of its profit and loss, I'm not talking about the price of the ETF again. I'm talking about the underlying performance of the fund. And you see that iBit is the worst, and that's likely a function of just the biggest. So it has had continual flows into iBit, no matter really what the price has been doing, which means that there's been a lot of people in iBit that have bought the top effectively is what this means. But the same trend is also happening to the rest of the Bitcoin ETFs. The other one that's underwater is BitB, and the rest are basically just about breaking even right now. But what it converts to iBit is actually that it is around $15, $16 billion in the red on its Bitcoin flows to date. So I'm going to show a zoomed in version of this now. And this is now specifically iBit. So we can see closer exactly what I'm talking about. So again, the price of Bitcoin, the percentage daily return of Bitcoin is in the dotted line in yellow. And the cumulative profit and loss for iBit is in blue.