BlackRock's New Bitcoin ETF Offers 13% Monthly Yield
The iShares Bitcoin Trust (NASDAQ:IBIT) is a popular way for investors to hold Bitcoin inside a brokerage account, thanks to its pure price exposure and low fees. However, IBIT provides no cash flow, which can be a problem for income-seeking investors.
To address this issue, BlackRock has launched the iShares Bitcoin Premium Income ETF (NASDAQ:BITA), an actively managed strategy that seeks to track the performance of Bitcoin while generating premium income through an options strategy. BITA writes call options against its Bitcoin exposure and passes the collected premium to shareholders each month.
The fund's distribution record shows it has paid $0.520369 on July 8, $0.799235 on August 7, and $0.657217 on September 8, for a running total of $1.977 per share since inception. This translates to a trailing distribution yield of roughly 13.41%.
However, covered-call income is not free, as it caps the upside on the portion of the book that is written against. In flat or choppy Bitcoin markets, BITA tends to outperform IBIT, while in sharp bull moves, IBIT wins on total return. Distributions may also include return of capital, which changes cost basis rather than counting as taxable income.