Getting it ‘backwards’: 10X Research calls out BlackRock’s new volatility BTC ETF

BlackRock announced that it had launched its iShares Bitcoin Premium Income ETF (BITA). However, crypto research firm 10X Research is not so optimistic about the ETF’s chances of yielding absolute returns in nearly every market scenario.

BITA, which began trading on the Nasdaq on June 16, holds a mix of spot Bitcoin and shares of BlackRock’s existing iShares Bitcoin Trust ETF (IBIT). The fund then sells call options against roughly 25% to 35% of the portfolio each month, collecting premiums it distributes as income.

Robert Mitchnick, BlackRock’s head of digital assets, reportedly stated that BITA is a “hybrid Bitcoin exposure product.” 

He estimated the fund retains about 70% of IBIT’s upside while targeting a mid-to-high-teens annual yield. “It’s going to be pretty compelling, we think, to a lot of investors,” Mitchnick said.

Why is 10X Research not so hyped about BITA?

10X Research published its rebuttal the same day BITA debuted, titling it “BlackRock’s Bitcoin Yield Trap.” The firm’s core argument was that BITA writes calls every month by mandate, regardless of whether conditions favor the trade.

According to 10X Research, only a specific set of conditions makes selling Bitcoin call options a high-probability trade, and for them, the premium collected justifies capping upside only if the conditions are met.

However, when these conditions do not align, 10X Research says that investors would be surrendering optionality at a discount instead of generating genuine yield.

The research firm compared BITA’s fixed monthly schedule with its own strategy, which it described as selective and conditional. 

In a May 12 report, 10X Research estimated that Bitcoin holders were collectively leaving $7 billion in annual yield uncollected, but it also stated that the edge comes from acting in only about 25% of months when conditions warrant it.

The covered-call tradeoff

The way the mechanics work is that when Bitcoin rallies, BITA’s spot holdings gain value, but the sold call options cap how much of that rally investors actually capture. 

When Bitcoin trades flat or drops, the option premiums cushion the decline, but don’t eliminate it.

Tagus Capital reportedly framed the strategy as targeting roughly 15% annual yield while retaining around 70% of Bitcoin’s upside. 

Analysts brought to the fore the implications it has for the market at large. For them, the systematic call selling at an institutional scale pushes down Bitcoin’s implied volatility, and BlackRock’s entry could accelerate a trend that has been visible since 2022.

Bitcoin’s 30-day implied volatility has been declining for years as more investors adopt overwriting strategies. BlackRock entering that trade with the backing of a $48.6 billion spot Bitcoin ETF adds a meaningful supply of options premium to the market.

Who is BlackRock targeting with this ETF offering?

Mitchnick pointed to financial advisors, insurers, and pension funds as BITA’s primary audience. These are institutions that have been interested in Bitcoin exposure but have struggled to justify an allocation to an asset that generates no cash flow.

“There’s no question that some of the challenges that they’ve had getting over the hump on Bitcoin in the past have been the absence of the yield,” Mitchnick said.

According to BlackRock, the fund carries a 0.65% sponsor fee. It launched with roughly $10.5 million in net assets and competes with the NEOS Bitcoin High Income ETF, which debuted in 2024 and charges a higher expense ratio. Goldman Sachs filed for a similar product in April.

10X Research’s criticism lands at a moment when Bitcoin ETF flows are already under pressure. U.S.-listed spot Bitcoin ETFs registered $64 million in outflows on Monday, bringing June’s total withdrawals to $2.1 billion. Bitcoin traded near $65,000 as of this report.