BlackRock filed for a Bitcoin (BTC)-backed exchange-traded fund (ETF) that seeks to limit initial losses to around 10% per options tranche in exchange for giving up some upside potential.
Key points:
BlackRock filed an application on October 19 for the iShares Bitcoin Managed Protection ETF, under the ticker PBIT.
The fund would use options linked to IBIT, along with cash and short-term debt, without holding spot Bitcoin.
The SEC has not yet approved the product, and the prospectus warns that investors could still lose money.
BlackRock’s PBIT filing
The world’s largest asset manager filed an application with the U.S. Securities and Exchange Commission (SEC) on October 19 to launch the iShares Bitcoin Managed Protection ETF, which is expected to trade under the ticker PBIT. The fund would hold neither spot Bitcoin nor other Bitcoin ETFs. Instead, it would use options linked to the iShares Bitcoin Trust, or IBIT, while keeping the rest of its assets in cash, money market funds and short-term investment-grade debt.
PBIT would generally spread its exposure across three overlapping options tranches, with one tranche expiring and a new one starting each month. It would primarily use FLEX options, exchange-traded contracts with customizable terms. Each tranche would buy calls with a strike price close to 90% of IBIT’s initial value and sell calls at higher levels, capping gains but helping to fund the protection.
This structure establishes an initial loss floor of about 10% per tranche, before fees. However, the prospectus stresses that this floor is not guaranteed, and losses could exceed it if Bitcoin rises after a tranche launches and then falls. Management fees have not yet been specified, and the proposed effective date is 75 days after filing, while the preliminary prospectus prohibits any sales before final registration.
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Seyffart highlights the trade-off
Bloomberg Intelligence senior analyst James Seyffart described PBIT as a “buffer” ETF, in which investors agree to limit their upside potential in exchange for partial protection against losses. He notes that this is BlackRock’s third Bitcoin ETF filing and that, for now, the firm offers products only on Bitcoin and Ethereum (ETH).
According to Seyffart, the product will fall under the 40 Act and buy and write options on IBIT to deliver predefined outcomes. He also points to comparable “buffer” Bitcoin funds already offered by Calamos and First Trust. The prospectus itself acknowledges that PBIT could significantly underperform IBIT in a bull market while remaining exposed to losses, and warns that periods of high volatility could reduce both its upside potential and the effectiveness of its protection.
BlackRock’s Bitcoin lineup
PBIT would add to the Bitcoin offerings BlackRock has been building since IBIT launched in January 2024. According to data published by the company, this spot fund held about $65 billion in net assets as of October 16 and serves as the reference asset for the options used by PBIT.
In January, the group sought approval for a Bitcoin income fund that generates premiums by selling covered calls on its exposure. The product launched on June 16 as the iShares Bitcoin Premium Income ETF, or BITA, sacrificing some potential upside in favor of monthly income. PBIT would use the same options toolkit, but this time to provide protection rather than income.
Coming up: Crypto’s 39.6% rally poses a problem: spot buyers aren’t following