BlackRock's Covered-Call Bitcoin ETF Begins Trading While Bitcoin Is Down 23 % Year to Date

BlackRock's iShares Bitcoin Premium Income ETF began trading Tuesday under the ticker BITA. The fund holds spot bitcoin and shares of the iShares Bitcoin Trust while selling call options on roughly 25% to 35% of its portfolio to generate premiums. Bitcoin trades around $67,000 and is down about 23% year to date.

The product targets income-focused investors and bitcoin holders seeking cash flow. It also addresses investors who have avoided non-yielding assets such as bitcoin or gold. IBIT, which debuted in January 2024, has amassed nearly $49 billion in assets.

U.S. head of equity ETFs at BlackRock said the firm had considered the covered-call bitcoin ETF concept for some time. "This is something we've had as an idea for a while," he told CoinDesk. He described demand from investors who want income from a long bitcoin position.

"Irrespective of market conditions, you've seen that there are investors across the spectrum... looking to generate some amount of income off of still having a mostly large, mostly long position to bitcoin," he said. He added that some clients hold a significant share of their wealth in bitcoin and seek an income stream.

"You could imagine this could be people who have a significant portion of their wealth in bitcoin but would like to have an income stream to support their lifestyle," he said. Jacobs also pointed to investors who have avoided bitcoin or gold because those assets do not produce cash flow. "How can I own gold in a portfolio if it's not generating cash in any way?

This product seeks to help address that market as well," he said. While some IBIT investors may shift assets into BITA, he expects the new fund to draw participants who are not current IBIT owners. "The income investor primarily driven by income, or the sophisticated investors that need to associate a cash flow with an asset, those are probably not IBIT owners today," he said.