BlackRock Reduces Loss Risk with Bitcoin ETF Initiative

BlackRock is pursuing an exchange-traded fund (ETF) that seeks to capture profits from Bitcoin price increases within a certain limit while reducing the risk of losses. According to a revised registration statement submitted to the U.S. Securities and Exchange Commission (SEC) on the 19th, BlackRock is preparing the 'iShares Bitcoin Managed Protection ETF,' with the ticker symbol 'PBIT.' This ETF will invest in options based on BlackRock's Bitcoin spot ETF, the 'iShares Bitcoin Trust ETF (IBIT),' instead of directly purchasing Bitcoin. By buying the right to profit from Bitcoin price increases, it relinquishes gains that exceed a certain level. As a result, the ETF's profits are capped at a certain level. Additionally, it will invest in cash, money market funds (MMFs), and short-term government bonds, with interest income contributing to the cost of option purchases. The options will be managed in three bundles with different maturities, utilizing options that can be purchased at prices approximately 10% lower than the underlying asset price. However, this does not mean that the total loss of the ETF is limited to 10%, and actual losses could be greater. BlackRock warned that the effectiveness of profit and loss protection may diminish in times of high market volatility.

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