10/10 update below. This post was originally published on October 09
Bitcoin has surged into October, with traders strapping in for a market “frenzy” in coming months.
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The bitcoin price has hit a fresh all-time high over $126,000 per bitcoin, giving it a market capitalization of around $2.5 trillion amid fears of a Federal Reserve-fueled U.S. dollar crisis.
Now, as U.S. president Donald Trump floats the idea of a $2,000 Covid stimulus check-style tariff dividend, BlackRock’s market-leading spot bitcoin exchange-traded fund (ETF) is on the verge of crossing $100 billion in assets under management—on track to hit the milestone far faster than any other ETF in history.
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BlackRock chief executive Larry Fink has become one of the most bullish crypto voices on Wall Street, helping the bitcoin price rocket higher since early 2024.
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BlackRock’s IBIT, which launched in January 2024 to huge fanfare, has surged thanks to massive inflows over the last few months and the increase in the value of the bitcoin price itself. The fund now has assets of $98.6 billion and could cross the psychological line in a matter of days.
10/10 update: The bitcoin price has dipped as the crypto market rally comes off the boil, even as the Federal Reserve looks all but certain to cut interest rates again later this month.
“Bitcoin volatility is poised for a breakout. Implied volatilities across 14, 30, and 90-day expiries have surged to their highest levels in the past 30 days, pointing to increased anticipation of big moves ahead,” Sean Dawson, head of research at leading onchain options platform Derive.xyz, said in emailed comments.
“This spike comes as markets price in a near-certain 25 basis point rate cut by the Federal Reserve later this month, with Polymarket odds currently sitting at 90%. Following a 3% dip from $123,000 to $120,000, bitcoin has recovered to $121,600. According to Coinglass data, a dense band of short positions is at risk of liquidation just above this level. A modest push upward could trigger a cascade of liquidations and propel BTC back toward $125,000 and beyond.”
Bitcoin and crypto traders remain bullish despite the latest bitcoin pull back, with analysts pointing to a mismatch between current price action and the underlying market.
“Bitcoin is up 7% in October, perfectly matching its seasonal pattern — but this time, the rally feels different,” 10x Research analysts led by chief executive Markus Thielen wrote in an emailed note.
“Despite trading near all-time highs, momentum is fading, and what once looked like a clean breakout now sits in no-man’s-land. Beneath the surface, the story unfolds differently: institutional whales are buying aggressively, while early adopters quietly sell into strength.”
Bitcoin ETFs could add another $20 billion worth of inflows before the end of the year, according to some market watchers, with the lion’s share of that likely to go to BlackRock’s bitcoin fund.
“Following the recent rally over the first weekend of ‘Uptober’, which saw bitcoin’s price surge to a new all-time high above $125,000, record-level ETF inflows totalled above $3 billion across the first week of the month,” Dom Harz, cofounder of bitcoin decentralized finance (DeFi) platform BOB, said in emailed comments.
BlackRock’s IBIT is on track to hit the $100 billion milestone about five times faster than any other ETF in history, according to a report from Bloomberg Intelligence ETF analysts Eric Balchunas and James Seyffart, with it also “by far the youngest” of the 20 largest ETFs.
BlackRock’s flagship S&P 500 ETF took 25 years to reach its current revenue levels, while IBIT has achieved higher profitability in less than two years.
The fund, charging a 0.25% fee, is thought to bring in annual revenue of $240 million for BlackRock, becoming the most profitable BlackRock ETF when it surpassed BlackRock’s IWF and EFA funds in July.
“The fact that IBIT is now BlackRock’s most profitable product is extremely impressive,” Seyffart, who added that BlackRock’s bitcoin fund—and rival crypto-tied ETFs—faced a lot of criticism ahead of their launches last year, told Bloomberg.
“We were very bullish on the amount of demand and flows that we thought would come into the bitcoin ETFs, but even these numbers have blown away our most bullish expectations.”
The BlackRock bitcoin fund has become the de facto route for traditional finance to gain bitcoin exposure, with the surging popularity of the “debasement trade” this year catapulting bitcoin higher along with gold.
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The bitcoin price has rocketed higher along with gold this year, with some analysts predicting the bitcoin price has further to climb in the months ahead.
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“While it’s very possible that gold will continue to outperform other assets for the foreseeable future, it has certainly become a crowded trade,” Nic Puckrin, investment analyst and co-founder of The Coin Bureau, said in emailed comments.
“That means there is more risk involved in initiating exposure at this point. After more than a 50% rally in the gold price year-to-date, attention may now turn to other alternatives that express a similar view. These include other metals and commodities, tokenized real assets, and bitcoin, which remain undervalued against gold. These alternative assets can all play a similar role in portfolios—a hedge against future inflation and political intervention, and an alternative to the U.S. dollar and other debasing currencies.”
Crypto ETFs more widely drew record inflows of almost $6 billion globally last week, according to data from CoinShares.
“This level of investment highlights the growing recognition of digital assets as an alternative in times of uncertainty,” James Butterfill, head of research at CoinShares, wrote in the weekly report.
US stock futures are showing tentative gains as investors continue to weigh up the implications of a government shutdown that enters its tenth day. According to the Kalshi prediction market, the current forecast signals a possible 24-day shutdown this time around. The standoff in Washington remains unresolved, though some lawmakers have signalled a willingness to compromise on healthcare subsidies to end the impasse. Crucially, there have been some claims that next week’s CPI inflation reading will still be released by the BLS irrespective of whether an agreement is reached in time. Looking ahead, attention will turn to the University of Michigan consumer sentiment survey, expected to dip to 54.1 from 55.1. With a degree of hesitancy being shown in US futures, there is likely to be some caution as we weigh up the potential implications of the third quarter earnings season. Kicking off with the likes of JPMorgan and Citigroup next week, markets are likely to take on a wait-and-see approach as elevated valuations mean that weak corporate data would likely hurt market sentiment more than positive numbers benefit it.