BlackRock Bitcoin ETF Edges Out S&P 500 Despite Record Drawdown

BlackRock's Bitcoin exchange-traded fund (ETF) has managed to outperform the S&P 500 since its launch, despite experiencing a drawdown nearly three times as deep. The iShares Bitcoin Trust, or IBIT, returned 67.74% from its Jan. 11, 2024 debut through Aug. 31, compared with 66.14% for Vanguard's S&P 500 ETF, or VOO, on a total-return basis that reinvests dividends.

This left IBIT ahead by just 1.60 percentage points after Bitcoin surged to a record high and then gave back much of those gains during a prolonged downturn. Bloomberg senior ETF analyst Eric Balchunas described the result as 'hard to believe' but noted that the gap remained narrow, even given the bearish mood that dominated Bitcoin from October through July.

IBIT's narrow lead came with a 53% drawdown, which is significantly deeper than VOO's maximum drawdown of 18.69%. Investors who bought both funds when IBIT launched therefore ended Aug. 31 with broadly similar cumulative returns, but Bitcoin ETF holders had to withstand a decline of more than half from the fund's peak.