BlackRock has just launched a Bitcoin ETF with double-digit yields, and reactions within the crypto industry are mixed.

Written by: ByBoaz Sobrado

Translated by: Luffy, Foresight News

“Senior ETF analyst Eric Balchunas reveals that BlackRock’s Bitcoin yield ETF (BITA) is about to launch,” crypto commentator MartiniGuyYT posted. He quoted Balchunas saying that the fund aims to “achieve an annual yield of 15-25% while striving to capture at least 70% of Bitcoin's upward potential.”

The world’s largest asset management company, BlackRock, launched the iShares Bitcoin Premium Yield ETF (ticker: BITA) on Nasdaq in mid-June. Bitcoin itself generates no native yield, yet this product can provide investors with cash dividends.

How is the yield generated? BITA relies on BlackRock's spot Bitcoin fund IBIT to earn stable option premiums by selling covered call options for investors, at the expense of sacrificing some of the substantial upside potential of Bitcoin. Robert Mitchnick, BlackRock’s global head of digital assets, stated in an interview with CoinDesk that this yield-focused Bitcoin fund represents the next step in the natural evolution of the industry, designed specifically for investors and institutions seeking stable cash flow, addressing the pain point that institutions cannot hold zero-yield assets. He mentioned that the product performs better in sideways or declining Bitcoin markets; however, if Bitcoin experiences a substantial unilateral surge, the fund's gains will lag behind spot prices.

Bullish Viewpoint: This Product Will Propel Bitcoin Prices Upward

Trading blogger TimWarrenTrades stated, “BlackRock is directly targeting Strategy company; this ETF essentially transforms high-yield investment funds into incremental Bitcoin demand. Previously, when BlackRock issued Bitcoin-related ETFs, the market rallied.”

The inflow data for IBIT also supports this logic. According to @thepfund, this week, IBIT saw a net inflow of 906 Bitcoins in a single day, worth $57.67 million. CoinEdition also pointed out that during the same period, Fidelity accumulated 37,700 Bitcoins, showing strong institutional confidence in allocation.

Veteran Bitcoin investor Michael Terpin remarked on the podcast "On The Margin" that this issuance timing aligns with the Bitcoin halving cycle he has observed for ten years: “The four-year cycle pattern has never failed; yet in every bear market, the vast majority of analysts claim that the cyclical logic has failed.” In his view, the widespread market pessimism is precisely a signal of hitting the bottom: “Anyone who has experienced a complete bull and bear cycle knows that now is the time to position; the cyclical rotation has its underlying logic.”

He believes the buying group for Bitcoin has not yet formed. “Only about 4% of the global population holds Bitcoin, and only 8% of people possess various crypto assets. The industry is at a critical juncture of crossing a chasm, and the early user ratio is stuck right at that 4% threshold.”

Major institutions' price targets also signal optimism. JPMorgan predicts a peak Bitcoin price of $170,000 in this cycle, VanEck sees it reaching $180,000, and Standard Chartered determines around $59,000 as the bottom of this cycle, stating that the crypto winter is over.

Bearish Viewpoint: Appearing to Offer High Returns, It's Actually a Yield Trap

There are also straightforward warnings from within the industry. Paolo Ardoino, CTO of Bitfinex and Tether, believes that a massive influx of funds into ETFs is not beneficial for the long-term development of the crypto industry. “I do not think ETFs are necessarily a good thing for the crypto ecosystem,” he said in an interview; “If 99.99% of Bitcoins are concentrated in various ETFs, what might the whole industry become?”

Ironically, the custody business is precisely the revenue source for his company. “Every day, many users treat us like a bank, but I would prefer that users manage their private keys themselves and truly hold Bitcoin.” He admitted that while custody services can be quite profitable, they do not align with the original philosophy of crypto.

Moreover, traders have raised more specific questions: this yield product will not bring in new incremental Bitcoin funds, but only redirect existing funds that were originally intended for direct spot purchases. A popular video from the information channel Glimpse Market points out the core contradiction clearly: Bitcoin itself does not generate cash flow out of thin air; the product's returns rely entirely on option instruments artificially created, locking investors' upside potential while fully exposing them to downside risks, which is fundamentally a trap.

The expectations for the market bottom also show huge discrepancies. Galaxy Research predicts that this cycle's bottom may drop to $40,000 to $46,000, which is in stark contrast to Standard Chartered's determination that “the bear market has ended.”

What Influences Bitcoin Prices?

Terpin distinguished the essential differences between two types of funds: “ETF funds are not long-term holding funds, fundamentally different from corporate treasury funds like MicroStrategy that borrow to hold Bitcoin without moving them.” He also emphasized that Bitcoin's supply side has strong scarcity, “Weeks ago, Bitcoin's total network mined the 20 millionth coin, with only 1 million coins left to be mined, but it will take over a hundred years to mine them all.”

He provided a long-term price target far exceeding that of major institutional analysts: “As the S-curve of adoption reaches an explosion, supply shortages will lead to significant market reversals, and scarcity effects will drive Bitcoin into a super bull market. I believe the price could potentially reach one million dollars.”

BlackRock's BITA management fee is only 0.65%, lower than similar covered call option yield funds in the market. YouTube industry analysts noted after reviewing the filing documents that BlackRock is accelerating its market capture, launching ahead of Goldman Sachs’ similar competing product in July.

Fund flow will provide the final answer. If BITA and IBIT continue to absorb Bitcoin, while Bitcoin maintains the $65,000 range, it indicates that real institutional buying has sustainability; on the contrary, if the yield-focused ETF only diverts existing funds from spot funds, then the bears' judgment of “yield trap” will be validated.

Twitter user @frugalbc summarized: “Same Bitcoin value over sixty thousand dollars, but the situation has drastically changed. The $67,000 in 2021 was a historical peak; today's price closer to the bottom of this cycle has been overlooked by the bears.”