BlackRock Files for Bitcoin ETF That Trades Capped Gains for a 10% Loss Floor

BlackRock filed on Monday to register the iShares Bitcoin Managed Protection ETF, a fund built to give up part of bitcoin’s gains in return for a cushion against sharp declines. It would trade under the ticker PBIT and become the asset manager’s third U.S. bitcoin-linked ETF.

According to the preliminary prospectus, which BlackRock submitted to the Securities and Exchange Commission as an amendment to the iShares Trust registration, the fund “seeks to provide upside exposure to the iShares Bitcoin Trust ETF (IBIT) and/or similar bitcoin exposure up to an approximate limit, while seeking to provide a level of downside protection.”

Bloomberg Intelligence ETF analyst James Seyffart called it a “buffer” bitcoin ETF, in which “investors will give up some upside to get that protection.”

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PBIT would not own bitcoin or shares of any bitcoin exchange-traded product. Instead, it would hold call options that reference IBIT and similar products, plus a pool of cash, money market funds and short-term government and investment-grade debt whose interest helps pay for those options.

The options sit in three overlapping tranches, with start dates spaced a month apart across a calendar quarter. Every month, one tranche rolls off and a fresh one replaces it. Each tranche is a long call spread: the fund buys calls struck below the reference price and sells calls struck above it.

The lower strike is usually placed near 90% of the reference asset’s value when the calls are bought, which limits a new tranche’s loss exposure to roughly 10% before fees. The upper strike sets the cap on gains and depends on market conditions. BlackRock can adjust the floor level at any time, and because the tranches overlap, the fund as a whole carries no fixed floor or cap. The filing also cautions that if bitcoin climbs after a tranche begins, losses measured from that higher price can run past 10%.

BlackRock Fund Advisors would manage the fund, with Erin Armstrong, Kyle McClements and Richard Mejzak named as portfolio managers.

The draft leaves the management fee and total annual expenses blank. BlackRock marked the amendment to take effect 75 days after filing, which would land in early January 2027 unless the timeline changes. A registration filing is not an approval, and the prospectus states the shares may not be sold until the registration is effective.

In June, BlackRock launched the iShares Bitcoin Premium Income ETF (BITA), which sells call options on part of its holdings to pay out yield. Both newer funds limit bitcoin’s upside: BITA does it to generate income, while PBIT would do it to limit losses.

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