IBIT: the iShares Bitcoin Trust, and why it swallowed the category

What IBIT is

IBIT is a trust that owns bitcoin and issues shares against it. Buy a share through any ordinary brokerage account and you own a proportional claim on the bitcoin sitting in cold storage at the fund's custodian. The share price tracks the bitcoin price, less the sponsor's fee, which is deducted continuously by selling a tiny amount of the fund's holdings. That is the whole design. There is no active management, no derivatives overlay and no attempt to beat anything.

Structurally it is a grantor trust registered under the Securities Act of 1933. It is not a registered investment company under the Investment Company Act of 1940, which governs almost every other ETF a US investor has ever bought. That distinction changes which protections apply, and it is worth understanding properly before you buy — we set it out in the guide to what a Bitcoin ETF actually is.

What makes IBIT interesting is not its design, which is broadly identical to the other eleven US spot funds. It is the market share. IBIT holds around 60% of category assets and about 63% of the bitcoin, which means one fund from one sponsor sits at the centre of the entire US market for this exposure. Nothing about that was inevitable in January 2024 — eleven funds launched on the same morning with broadly similar terms. Liquidity begets liquidity, and IBIT won that race early.

The fee, and the waiver that expired

IBIT charges 0.25% a year. On a $25,000 holding that is roughly $63 annually; on $100,000 it is $250. Neither is painful in isolation, but it is not the cheapest option in the category either. Morgan Stanley's MSBT charges 0.14% and Grayscale's Mini Trust charges 0.15%, so a long-term holder is paying somewhere between 10 and 11 basis points a year for the privilege of being in the most liquid fund.

At launch BlackRock offered 0.12% on the first $5bn of assets for twelve months. That expired in January 2025, and BlackRock's own quarterly filing confirms no fees were waived during the first half of 2026. If you opened a position in early 2024 on the strength of the introductory rate, you have been paying full freight for well over a year. This is a general lesson rather than a criticism of BlackRock: fee waivers in this category are marketing instruments with expiry dates, and several investors have been caught by them. VanEck's HODL is the sharper example — its waiver lapsed on schedule with the fund nowhere near the asset threshold that would have extended it.

Liquidity and the options market

This is where IBIT is genuinely in a class of its own. Its 30-day median bid-ask spread sits around 0.03%, and since 2 January 2025 it has quoted in penny increments under the Penny Interval Program — a detail that sounds trivial and is not, because it directly narrows the cost of getting in and out. Thirty-day average volume has run above 54 million shares.

The options market is the bigger story. IBIT was the first spot Bitcoin ETF approved for listed options, on 20 September 2024, with trading beginning on 19 November 2024. Position limits started at 25,000 contracts, were raised to 250,000 in July 2025, and were raised again to 1,000,000 in April 2026. Open interest reached roughly 7.8 million contracts in late August 2026, with daily volume around 2 million contracts. For anyone writing covered calls, buying protective puts or building a collar around a bitcoin position, no other fund in the category is close.

That depth is also why the covered-call funds referenced in our Bitcoin income ETF guide tend to build their positions around IBIT rather than any other ticker — the liquidity has to come from somewhere.

Liquidity

Custody and creation mechanics

Coinbase Custody Trust Company holds the bitcoin. Anchorage Digital Bank is named in the filings as an additional custodian, though BlackRock states it has no current plans to move holdings there, and BNY holds the fund's cash. That arrangement is the norm rather than the exception — roughly 80% of all bitcoin held inside US ETFs sits with Coinbase Custody, a concentration we discuss honestly on the issuers and custodians page. If that bothers you, Fidelity's FBTC self-custodies and ARK 21Shares' ARKB splits across three providers.

On the creation side, IBIT names thirteen authorised participants in its annual report, including Jane Street, Virtu Americas, JP Morgan Securities, Goldman Sachs, Citadel Securities, Macquarie, Jefferies, UBS, BofA Securities, Citigroup, BMO, ABN AMRO Clearing and Marex. Only four of those — Jane Street, Virtu, JP Morgan Securities and Marex — have executed in-kind agreements, because in-kind creation requires an affiliate that can actually hold bitcoin.

In-kind creation and redemption was approved by the SEC in July 2025 and IBIT uses it at scale: its most recent annual report shows $5.76bn of bitcoin purchased in-kind against shares issued, and $845m paid out in-kind against redemptions. The practical effect is cleaner arbitrage and tighter spreads, because market makers no longer have to route everything through a cash leg that the fund itself must then convert. The mechanism is explained properly in how Bitcoin ETFs work.

Who IBIT suits — and who it does not

IBIT is the right answer if any of the following describe you. You want to trade options against a bitcoin position. You are moving enough money that the spread matters more than the expense ratio. You rebalance frequently. You are investing through an adviser or platform that gravitates to the largest, most liquid fund on the desk. Or you simply want the fund least likely to be closed, merged or repriced, which after Hashdex's DEFI wound down in August 2026 is no longer a purely theoretical concern.

It is the wrong answer if you are a straightforward buy-and-hold investor with no interest in options, contributing occasionally and planning to leave the position alone. In that case you are paying a liquidity premium you will never use, and the Mini Trust or MSBT does the same job for around ten basis points less each year. It is also the wrong tool entirely if what you actually want is bitcoin you can withdraw and control, in which case no ETF is the answer — see our comparison of holding the fund versus holding the coin.