Will it break the market? BlackRock offers Bitcoin protected from crashes

BlackRock is launching a new Bitcoin ETF, PBIT, with a built-in mechanism to protect against sharp declines, aimed at conservative investors. The protection limits losses to about 10% but also caps potential gains.

Asset management giant BlackRock is launching a new Bitcoin ETF, PBIT, aimed at investors who are wary of the high volatility of the digital currency. The new product offers exposure to Bitcoin with a built-in mechanism to limit losses in case of sharp declines, but the protection comes at the cost of capping potential gains. Unlike a regular ETF, PBIT will not hold Bitcoin directly, but will use options on the IBIT ETF and low-risk assets like government bonds. The structure is based on three 'layers' of protection, each lasting about three months, with a loss floor of about 10% and a profit cap. However, the protection is calculated from the opening price of each layer, not from the investor's entry price, and BlackRock has broad discretion to change terms. The article notes that BlackRock's brand power may make the product a success, similar to IBIT. The article does not constitute investment advice.