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• The fund will trade options on IBIT and similar Bitcoin exposures, typically limiting the initial loss for each tier to about 10%, while setting a cap on profits as well.
• According to SoSoValue data, IBIT attracted $665.2 million in capital inflows on Monday, making it the only product among the 12 US spot Bitcoin ETF that recorded a net inflow.

According to a document submitted to the U.S. Securities and Exchange Commission (SEC) on Monday, BlackRock has applied to launch a “buffered” Bitcoin ETF. Such products will set a cap on investors’ profits in exchange for limits on losses.

The fund will not directly hold Bitcoin or Bitcoin ETF. Instead, it will buy IBIT or similar call options with a Bitcoin exposure, and sell call options with a higher strike price to help cover the costs. The fund will be divided into three overlapping tiers, with the start dates staggered by month, so that each month one tier will expire while a new tier begins. The fund will also hold fixed-income investments to earn interest.

The document shows that each tier of protection typically starts at around 90% of the reference asset value, which means that before fees are deducted, the initial loss is usually limited to about 10%. The upper limit on returns is determined by market conditions at the beginning of each tier, and the fund has considerable room for adjustment in both of these parameters; therefore, investors should not expect fixed results.

Buffered Bitcoin ETF is not a new product. Calamos, First Trust, and Innovator have already offered fixed-return funds linked to Bitcoin. However, Seyffart indicates that when BlackRock enters this field, “it often causes a significant stir.”

James Seyffart wrote on X: "Breaking news: BlackRock has just applied for another Bitcoin ETF. This will be a 'buffered' Bitcoin ETF, which means it will provide protection against downward movements, but investors will give up some of the potential upward gains in exchange for this protection. The code will be PBIT."

At the time of this application, BlackRock's IBIT – currently the largest spot Bitcoin fund with a net asset value of $66.37 billion – recorded a net inflow of $665.2 million on Monday. According to SoSoValue data, this is the only one among 12 similar funds to achieve a net inflow. Meanwhile, Fidelity's FBTC saw an outflow of $83.6 million, and Grayscale's GBTC had an outflow of $54.9 million, resulting in a total net inflow of $526.6 million for the day.

Before the capital inflow on Monday, US spot Bitcoin ETF experienced a round of selling. Over the past two weeks, such funds have seen a total outflow of approximately $910 million, with $228.6 million flowing out last week and $681.1 million the week before that. Reports indicate that inflation data that exceeded expectations reignited market bets for another interest rate hike by the Federal Reserve. As of last Friday, these funds had seen a cumulative outflow of about $615 million in October.

SoSoValue data shows that since their launch in January 2024, these funds have accumulated a net inflow of $57.4 billion, and the current total net asset value is $105.46 billion.