The IBIT Bitcoin ETF, managed by BlackRock, has seen impressive early success but now faces new challenges as market conditions shift. Bloomberg ETF analyst Eric Balchunas warns that Bitcoin’s correlation with traditional stock markets could limit IBIT’s long-term growth, potentially hindering broader adoption.
$IBIT did reach $50b in first year (it took $VOO six years to hit that mark) so def one to watch but it would take a ton more adoption (flows) AND you probably need a break in correlation with stocks. But btc tends to go down (worse) when stocks decline, which will make it hard… https://t.co/CCud9vzomE
— Eric Balchunas (@EricBalchunas) February 18, 2025
Institutional Interest Remains Strong
Despite concerns over volatility, institutional investors continue to show interest in IBIT. Recent 13F filings, mandated by the U.S. Securities and Exchange Commission (SEC), reveal that IBIT has attracted 1,100 institutional holders—far surpassing previous records for a first-year ETF. By comparison, a nuclear-themed ETF launched on the same day has only 29 holders.
IBIT remains the largest Bitcoin ETF, currently holding 2.98% of Bitcoin’s total supply. It has also drawn significant investments from major financial entities, with Abu Dhabi’s Mubadala Sovereign Wealth Fund investing $436 million last week, making it the seventh-largest IBIT holder.
Growth Slows Amid Outflows
While institutional adoption surged in Q4 2024—tripling assets under management to $38 billion—recent data indicates a slowdown. Last week, Bitcoin ETFs saw their first net outflows, totaling over $585 million. On February 18, additional outflows of $129 million were recorded. Analysts attribute this decline to investor caution following Federal Reserve Chair Jerome Powell’s stance against imminent interest rate cuts, alongside persistent inflation concerns.
Outlook: Can IBIT Maintain Its Momentum?
Balchunas notes that while IBIT reached $50 billion in its first year—an achievement that took Vanguard’s VOO ETF six years—sustained growth will require a break in Bitcoin’s correlation with stocks. Without this, IBIT may struggle to attract the long-term flows necessary for continued expansion.
Also Read: Michael Saylor’s Strategy Pauses Bitcoin Buys, Prepares $2B Stock Sale for More BTC
As Bitcoin ETFs navigate an uncertain financial landscape, all eyes remain on whether institutional adoption can counteract broader market challenges. With regulatory decisions and macroeconomic factors playing a crucial role, IBIT’s trajectory in 2025 remains uncertain but worth watching closely.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
About The Author
