BlackRock's new bitcoin income fund offers cash flow alongside BTC exposure

Opening for trade on Tuesday, BlackRock’s newest bitcoin exchange-traded fund —the Bitcoin Premium Income Fund (BITA) — is less about market timing and more about meeting a growing range of investor needs as the asset class matures, according to Jay Jacobs, the firm’s U.S. head of equity ETFs.

“This is something we’ve had as an idea for a while,” Jacobs told CoinDesk in an interview. “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.”

The fund seeks to provide investors with exposure to bitcoin while generating monthly income through a covered call strategy. BITA holds spot bitcoin and shares of the iShares Bitcoin Trust (IBIT), then sells call options on roughly 25% to 35% of the portfolio to collect premiums.

The new fund offering comes as bitcoin struggles to break out of a bear market, trading around $67,000, down about 23% year to date. IBIT, which debuted in January 2024, has amassed nearly $49 billion in assets, making it the largest spot bitcoin ETF on the market. The fund has seen significant outflows since the beginning of the year, though, amid lower bitcoin prices and excitement around other asset classes, including the highly anticipated initial public offerings (IPOs) of SpaceX (SPCX) and Anthropic.

But Jacobs said BlackRock sees several potential audiences for the new fund.

One group consists of income-focused investors looking to diversify beyond traditional sources such as dividend-paying stocks and bonds. Another includes bitcoin holders who remain bullish on the cryptocurrency but want to generate cash flow from their positions.

“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,” Jacobs said.

A third group may be investors who have historically avoided assets such as bitcoin or gold because they do not produce cash flow.

“We’ve encountered this type of investor for years,” Jacobs said. “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.”