IBIT: Still The Best Gateway To The Hardest Asset In The Market

Summary I view Bitcoin as the 'hardest' asset due to its scarcity, portability, divisibility, durability, transparency, and fungibility, supporting my bullish thesis.

IBIT is the most successful and liquid Bitcoin ETF, benefiting from a virtuous cycle of growing AUM, trading volume, and tight spreads.

It attracts both active traders and holders.

For most investors, IBIT offers a superior, low-hassle way to gain Bitcoin exposure compared to self-custody, with minimal custody risk via Coinbase.

IBIT remains my top recommendation for Bitcoin bulls seeking efficient exposure, though allocation should match individual risk profiles given Bitcoin's volatility.

With Bitcoin ( BTC-USD ) close to ATHs, I recently covered what on-chain data says about a bullish case for this cryptocurrency.

Today, I review once again the iShares Bitcoin Trust ETF ( IBIT ; IBIT:CA ), which I extensively covered in the past as one of my favorite tools to invest in Bitcoin.

Why do I think Bitcoin’s is the “hardest” asset in the market? While this article is not a deep dive into Bitcoin, I still want to cover the reasons why I am bullish on it.

I consider Bitcoin as humanity’s current “hardest” asset.

The reasons are the following: Bitcoin is extremely scarce .

Only 21 million coins will ever exist, making it significantly rarer than gold.

Gold is naturally present throughout the Earth’s crust - at about 3.1 parts per billion.

With enough money and tech, we could keep mining it forever.

Bitcoin’s hard cap, on the other hand, is set in its code.

It is very portable .

Unlike gold, which is considerably complex to move (as it is heavily regulated), Bitcoin can be sent across the globe for next to nothing.

It can be easily split (it is divisible ).

One Bitcoin breaks down into 100 million parts called Satoshis, which can facilitate its use.

It is durable , thanks to its limited physical presence.

Bitcoin is just code on a digital ledger, safe from rust, rot, or wear.

Anyone can check it .

Every transaction lives on the blockchain, open for anyone to see.

That transparency makes Bitcoin a lot less shady than people assume - criminals actually have a tough time hiding with it.

It is fungible .

One Bitcoin is the same as any other, just like gold bars or dollar bills.

To be clear - the fact Bitcoin has these technical characteristics does not ensure it will ever actually mature into a global reserve asset.

It is a condition sine qua non Bitcoin could never aspire to being a global reserve.

I will cover more about this in my risk section.

My Bitcoin bull case sees Bitcoin maturing into a global reserve asset and reaching at least $ 750,000 per Bitcoin.

Obviously, readers who do not share my bullish take should not be invested in Bitcoin, via IBIT or via any other means.

Debunking Bitcoin myths In the context of calling Bitcoin “humanity’s hardest asset”, I want to spend a few words debunking some common myths about Bitcoin that I cyclically read on Seeking Alpha as well as on other online platforms.

I collected these in the table below, together with my thoughts.

Bitcoin Myth My debunking Bitcoin is not really scarce , as infinite cryptocurrencies can be created Thousands of cryptocurrencies have already been created .

Yet, no other has ever reached BTC’s market cap.

Many cryptos do not even compete with BTC in their intention, as they serve different purposes and do not aspire to be reserve assets.

Bitcoin is used for criminal activities BTC is a horrible choice to conduct crime.

The transparency of its blockchain means authorities can identify fraudsters.

It happened recently with Don Kwon, a fraudster extradited after cashing out his BTC in Serbia.

A far better option is cash USD, which is the preferred way of organized crime to conduct business.

Bitcoin is not scalable as means of payment BTC doesn’t need to be a mass scalable payment system.

For it to become a global reserve asset, it mostly needs to be held by institutions.

It is still far better for transactions as a reserve than gold or fiat currencies, which are controlled by governments.

Bitcoin is not used for everyday payments That’s because BTC has matured as a reserve asset, not as a payment system.

While it is true that Satoshi’s whitepaper saw it as a transaction payment, since the 2017 hard fork with Bitcoin Cash ( BCH-USD ), BTC’s bullish case rests on it being a reserve asset, not a transaction network.

Bitcoin can be hacked by Quantum computing Yes, and it doesn’t matter.

The blockchain can be updated with a majority consensus of holders and rendered quantum-proof.

Bitcoin is not a stale piece of code written in 2009. It is ever evolving and can stay up to date with technology.

Governments are against Bitcoin and won’t “allow” it Recent developments in the US suggest otherwise.

Ultimately though, what makes this impossible is that we live in a polarized world.

Not all governments act in unison and if some ban it or limit it, others won’t if they see potential.

Bitcoin is neutral and apolitical.

A far better reserve asset than currencies controlled by governments.

Bitcoin is not going to work if society collapses True.

If you are a doomsday prepper, you better stack gold, together with more weapons than your neighbor, food and water.

Bitcoin doesn’t have a physical form , so it cannot have value BTC has a digital form, in the form of the millions of transactions occurring on its ledger (blockchain), computed by thousands of computers on its network.

It is the same as money in a bank account, but decentralized, anonymous, yet transparent.

Bitcoin was the first crypto, there will be better “Bitcoins” BTC is the result of decades of evolution in p2p decentralized payment protocols, including now defunct eCash, Bit Gold and B-money.

The few other cryptos that challenged it failed to come close to it in market cap, 15 years after its launch.

This debunking exercise represents my opinion, and I have no doubt that people may disagree, even those that are bullish on Bitcoin and know the crypto community well.

I see the ongoing debate about some aspects of Bitcoin - for example its use and validity as a means of payment - as being integral part of the development of Bitcoin, and one of its key strengths.

IBIT: the ETF that keeps on winning When I covered IBIT for the first time , this ETF was already the best performing new ETF launch ever , in terms of AUM.

This trend continued, perhaps unsurprisingly given Bitcoin’s bull run, to date.

It is recent news that IBIT became the most profitable ETF of Blackrock, Inc ( BLK ), its issuer.

The table below outlines the evolution of key metrics of the IBIT ETF, compared to other Bitcoin ETFs.

The dates in the table correspond to the times I analyzed Bitcoin ETFs, including IBIT, in my past coverage on Seeking Alpha.

IBIT vs. competitive BTC ETFs (Author's work) Since April 2024, at the time of my first coverage, IBIT has only kept growing in size and distanced its competition .

In late 2024, IBIT overtook the Grayscale Bitcoin Trust ETF ( GBTC ) to become the first Bitcoin ETFs by AUM.

GBTC is an “ancestor” of Bitcoin ETFs as it was launched in the early 2010s as one of the first SEC compliant crypto funds.

Its issuer, Grayscale, recently launched the Grayscale Bitcoin Mini Trust ETF ( BTC ), which has more competitive fees.

I included BTC at the bottom of my table for completeness.

As it only launched in October 2024, I do not have enough historical data to measure it against.

In the last six months, IBIT kept growing its AUMs and, even more impressively in my opinion, its average daily volume.

Contrary to other Bitcoin ETFs, IBIT is increasingly more actively traded.

Something I think has to do with its very liquid options market, as well as its minuscule Bid/Ask spread of just 0.01% at the time of writing.

This makes IBIT simultaneously ideal for both long term holders (which enjoy competitive fees) as well as active traders (which need its high liquidity).

In this regard, I think IBIT has entered a virtuous cycle where its liquidity and brand capture most of the market for Bitcoin ETFs, increasing further its liquidity as a result.

This cycle will be very difficult for competitors to break, in my opinion.

The only way I see this happening is if another major fund decides to significantly lower fees, potentially attracting long term holders.

Even that, however, may prove not enough.

GBTC, despite its hefty 1.50% expense ratio, has still seen its AUM grow in the past 6 months.

Grayscale, its issuers, has also launched BTC with a competitive 0.15% fee (in my view, most likely “afforded” by the returns from GBTC’s hefty fees).

This ETF has grown to a respectable $ 5.3 Billion in AUM, but it has failed to dethrone any existing major Bitcoin fund yet.

Barring a “price war” between issuers, I think IBIT is set to remain the largest, most liquid ETF in the market.

This is why I think it is the best way for investors to get exposed to Bitcoin, today.

The case for and against self custody Readers, especially those more knowledgeable about Bitcoin, may wonder whether an ETF is indeed the best way to get exposure to Bitcoin.

Why not self custody , as in the practice of physically moving Bitcoin to a wallet on its Blockchain? There is a case for and against self custody.

For me, self custody comes with significant hurdles that I believe are better avoided for the majority of investors.

These include potentially complex tax reporting (especially on capital gains) and the hurdle of having to manage potentially significant amounts of money with a technology that may not be familiar to many.

Self custody means having to guard at the very least the “seed phrase” of an own Bitcoin wallet, with the risk of losing it together with the entirety of the content of the wallet.

The main advantages of self custody include being able to perform transactions on the blockchain (the original intent of Bitcoin as a technology) as well as enjoying a higher degree of anonymity.

I believe however that the vast majority of investors in Bitcoin are better off simply going for an ETF.

The only tangible risk of relying on an ETF concerns its custodian.

IBIT utilizes Coinbase Global, Inc ( COIN ) as do the majority of other issuers.

I think Coinbase is a reputable organization.

Together with the fact that IBIT is an SEC approved ETF, I see custody risk as a minimal drawback given the advantages of ETF exposure.

Risks of investing in Bitcoin and IBIT As I mentioned in this article, Bitcoin’s technical characteristics are not enough per se to make it mature into a global reserve asset.

Even readers that understand and recognize its technicalities can, in my view, be legitimately bearish on Bitcoin.

In other terms, one can be bearish on Bitcoin even if they recognize it as a hard asset.

The main risk of investing in Bitcoin today is, indeed, that it ends up never maturing into a global reserve asset.

For Bitcoin to mature to my bull case ($750,000 per coin), there is the need of trillions of capital to actually flow into this asset.

In my valuation model for Bitcoin, my bearish scenario is exactly the opposite; for BTC to become a sort of “online casino”, where the only value long term ends up being in Bitcoin’s volatility, useful for active traders.

Given that Bitcoin is, today, still a relatively immature asset, I think BTC exposure should be proportional to each investor’s risk profile and investment objectives.

Additionally, Bitcoin has been a very volatile asset historically, and it may very well continue being so for the foreseeable future.

Concerning IBIT specifically, the main issue in being exposed to this fund is its custody risk, which I covered in the previous section.

Additionally, IBIT’s expense ratio, albeit reasonable in my view, is also set to be detrimental to IBIT’s performance relative to the underlying asset.

Conclusion Blackrock’s IBIT is the most successful ETF launch in history, and the most profitable ETF for its issuer.

It is now “stuck” in a virtuous cycle where its excellent liquidity metrics attract simultaneously active traders and long term holders, improving its liquidity metrics further and its attractiveness as a result.

The gap between IBIT and its competitors' ETFs, in my view, is only set to increase in the upcoming future, barring a “price war” between issuers.

For Bitcoin bulls like myself, IBIT is a no-brainer to get exposure in a simplified, efficient manner to what I see as the “hardest” asset available in the market today.

Bitcoin bears should of course avoid this fund.

I recommend that anyone in between does their own research and only gets exposed to Bitcoin - if at all - in a way that is coherent with their objectives and risk profile..

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