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BlackRock files for a bitcoin ETF that trades some of IBIT’s upside for a buffer against losses
Summary
BlackRock’s iShares Trust filed a preliminary prospectus with the SEC on Monday for the iShares Bitcoin Managed Protection ETF, ticker PBIT, which “seeks to provide upside exposure to the iShares Bitcoin Trust ETF (IBIT) and/or similar bitcoin exposure up to an approximate limit, while seeking to provide a level of downside protection,” according to the filing; The Block reported the filing and called the fund the iShares Bitcoin Managed Protect ETF.
The prospectus says the fund will buy and sell options in three overlapping monthly tranches, using bought in-the-money calls for bitcoin exposure and sold out-of-the-money calls to help pay for them, which caps gains, plus short-term fixed-income holdings to earn interest.
Each tranche’s protection typically starts at about 90% of the reference asset’s value, an initial maximum loss of about 10% for that tranche before fees, but the filing says the fund has broad discretion to change those levels and that investors may lose some or all of their money.
The fund will not hold bitcoin or bitcoin exchange-traded products directly, its management fee has not been filled in yet, and the filing is set to become effective 75 days after it was filed.
Key facts
- Because the fund holds several overlapping tranches, the filing says it does not offer a fixed floor or cap, and investors should not expect the outcome of any single tranche held for its full period.
- The filing says the fund generally expects to use FLEX options and may also use standard exchange-traded options, and it is classified as non-diversified.
- The Block said IBIT holds more than $65 billion in assets, the largest fund of its kind according to The Block’s ETF tracker, and that BlackRock launched the iShares Bitcoin Premium Income ETF in June.
- Bloomberg Intelligence analyst James Seyffart said on X that this is BlackRock’s third bitcoin ETF filing and that the firm still has only bitcoin and Ethereum products, The Block reported.