Leading Bloomberg analyst Eric Balchunas said Monday that Blackrock's iShares Bitcoin Trust ETF (NASDAQ:IBIT) could surpass SPDR S&P 500 ETF Trust (NYSE:SPY) to become the world's top exchange-traded fund, but the process could take a long time.
What Happened: Balchunas, who has over a decade of expertise analyzing ETFs, responded to Bitcoin (CRYPTO: BTC) advocate Fred Krueger's prediction that the largest Bitcoin-based fund would become the most dominant investment vehicle in five years.
"I mean, it's not out of the question. And it's clearly dumb to underestimate BTC ETFs but.. will take a long time given how linked stocks and BTC price is," Balchunas said.
— Eric Balchunas (@EricBalchunas) December 24, 2024
I mean it's not out of the question. And it's clearly dumb to underestimate btc ETFs but.. will take a long time given how linked stocks and btc price is and b) $SPY has least growth of 3 SPX ETFs. $VOO meanwhile took in $100b this year alone, 3x btc ETFs.
Krueger theorized that mathematically IBIT, with nearly $50 billion in assets under management currently, would top SPY—a $640 billion fund that tracks the performance of the popular S&P 500 Index—in five years.
He highlighted the rapid growth of Bitcoin, with a compound annual growth rate of over 50% compared to the S&P 500's 10%, with the differential widening at a 40% CAGR.
Indeed, Bitcoin's 5-year CAGR was at 67%, according to Bitbo charts, while the S&P 500 grew at an annualized rate of 16.59% over the last five years, data from S&P Global showed.
"I expect AUM of IBIT to go to $200 billion next year, with just BTC outperformance and a doubling of inflows," Krueger stated.
However, Balchuna argued that Bitcoin's outperformance would boost SPY even more due to the strong correlation between the cryptocurrency's price and several S&P 500 stocks.
Why It Matters: Spot ETFs, tracking the price of Bitcoin, have been immensely successful since they started trading in January.
BlackRock's IBIT has been the hot favorite, with as many as 553,464 BTCs in its custody, making it the largest Bitcoin investment vehicle, according to bitcointreasuries.net.
Last month, the ETF launched options trading, with notional volume breaching the $1 billion mark on the first day of launch itself.
Price Action: Shares of IBIT closed 1.94% lower at $52.87 during Monday's regular session, according to data from Benzinga Pro. The SPY stock gained 0.60% to close at $594.69.
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