00:00So Bidda launch launches today. It's a Bitcoin income fund. And what you're targeting is anywhere from 15 to 20
00:06percent annual yield while capturing 70 percent of Bitcoin's upside.
00:09So my question to you is if investors wanted Bitcoin, they could buy Ibit. If they wanted income, they could
00:15get any of BlackRock's fixed income ETFs.
00:19What kind of investor is Bidda built for? Yeah, it's a great question. Scarlett, Tim, good to see you.
00:25It really we think will span a number of investor types. We've heard often through our journey and through Ibit's
00:32tremendous success that a lot of our clients actually the absence of an intrinsic yield in Bitcoin is something that
00:40has caused them to to not allocate thus far.
00:44So we think with this product, the ability to have roughly target 70 percent upside retention in Bitcoin plus let's
00:53call it high teens yield target is going to be really attractive.
00:56Think about financial advisors who maybe are more income focused for their clients, maybe a little bit more conservative.
01:02Think about some institutions for whom yield targets are really important.
01:06We think this will resonate there as it will, of course, with with end investors, too.
01:10There's certainly interest today. It's up 230 percent in the first day of trading.
01:15So you can't trust those. Your first day ticker prices sometimes.
01:19OK, want to make sure. Yeah.
01:21I'm curious about the you know, Scarlett asked about who it's for. You think interest is certainly going to be
01:27broad.
01:28I'm just wondering how it works, like how you communicate how this works to a population that includes people who
01:35might not understand the mechanics.
01:37Sure. Of what happens sort of under under the wrapper. Right.
01:40So what you're doing is basically monetizing the fact that Bitcoin is a volatile asset.
01:46The more volatile an asset, the more valuable options on it are worth.
01:51So holding Bitcoin or I bid as an underlier in the fund and then being able to write call options
01:57to sell call options to generate yield.
02:00And so the trade is you're giving up part of the upside in exchange for being able to capture that
02:05yield.
02:06So you can think of it as that sort of 70 percent target on the upside preservation and getting high
02:11teens ish yield.
02:13So Bitcoin goes down. We would expect that to perform if Bitcoin's flat.
02:17We'd expect that to perform if Bitcoin's up marginally.
02:20We'd expect that to perform if Bitcoin's up a lot.
02:24That's where we'd expect to bid to underperform.
02:26And that's the trade they're making. OK.
02:29So as Bitto writes options on I bid, BlackRock's spot Bitcoin ETF, this means that your firm, BlackRock, is building
02:34a derivative product on top of its own underlying fund, I bid.
02:39So you're both the manufacturer of the asset as well as providing the options overlay.
02:44That's a lot of involvement from BlackRock there.
02:46Should investors care that the house is writing options on the house's own fund?
02:51I think it's very natural. I bid is by far the largest Bitcoin exchange traded product today.
02:59And I bid options actually are the dominant options vehicle through which this market is expressed.
03:07So I bid options actually are deeper and more liquid than even Bitcoin options themselves.
03:11So it's natural that these form the building blocks of the product we've built.
03:15We're in the midst of a crypto winter, I think many would argue, especially when it comes to Bitcoin, down
03:22still roughly 50 percent from those all-time highs.
03:24Does that make this environment actually more attractive for launching this product?
03:28In some ways, yes. And we've seen through the cycles that the demand and interest from clients has been quite
03:37steady.
03:38Clearly, when Bitcoin is going up, it's even stronger.
03:40But we've seen inflows in lots of down market periods for I bid.
03:45Here, this is a product that targets, as we've talked about, a little bit more conservative investor base, more yield
03:51focus, like the fact that this slightly dampens the volatility of Bitcoin.
03:56And so I think for a lot, they'll see this as an opportunity.
03:59To Scarlett's first question about, like, you know, if you want certain things, there are other products from BlackRock that
04:05people can go and buy.
04:06The question I have is about what people sell in order to buy this.
04:11Like, what does this replace in somebody's portfolio?
04:14Yeah, well, most of the allocations that we're seeing in I bid even, you know, despite the extraordinary asset gathering
04:21pace that it's had, tend to be relatively small amounts of portfolios.
04:25We're not talking about people, you know, selling 10, 15 percent of their positions to make room for this.
04:32We're talking about typically we would expect low single digits.
04:35And so it's going to vary. For some, it might be their existing Bitcoin exposure.
04:39For others, it may be gold, where they haven't been able to monetize yield on gold, and now they can
04:45actually do it through Bitcoin as this digital gold instrument.
04:48For others, it'll just be equities. For some, it'll be fixed income.
04:51So we think it's going to be a mix, which is frankly consistent with what we've seen on how people
04:55have funded new positions in I bid as well.
04:57You talk about how BIDA will appeal to a more conservative investor who kind of has been eyeing Bitcoin, but
05:03maybe hasn't really gone forward with anything yet.
05:06How much overlap do you anticipate between holders of I bid and this new BIDA?
05:10There will be some. For example, I'll be I'll be one who, you know, takes advantage of this product.
05:17And long before we started with this idea, I've experimented with how could I replicate something like this myself.
05:24And it's incredibly difficult as an individual investor to actually do that.
05:28So there'll be, I think, a bunch of new investors who this will be the first time they allocate to
05:33something with Bitcoin exposure.
05:34But there'll also be some that continue to hold some Bitcoin or some I bid, but add this to generate
05:39a yield producing component to their overall exposure.
05:43What's maybe the next area of innovation? Like if we're talking to you in a year or two, what's the
05:48product that you're going to be telling us about that you're working on now?
05:50Well, we've moved pretty slowly in terms of new product launches in this space, as you've seen, which is deliberate,
05:56right?
05:56So I bid was extraordinarily successful. We launched that two and a half years ago.
06:00And in the U.S., this is just the third additional product that we've done.
06:05We did the two Ether products, one with staking, one without, and now this.
06:10So we've taken a very discerning approach.
06:12We want to validate that something has very clear client demand before we do it and that it's something that's
06:17going to long term be beneficial.
06:19So it'll be that continued, slow, measured approach.
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