Bitcoin’s annualized volatility has fallen from roughly 80 to the 35-40 range, and BlackRock says the ETF market it helped build is the main reason. Jay Jacobs, the firm’s head of US equity ETFs, made the claim on Anthony Pompliano’s podcast published September 18, arguing the shift is structural rather than a temporary lull.
Jacobs attributed the compression to two forces. The first is the holder base that accumulated around the iShares Bitcoin Trust, known as IBIT, which he described as longer-term buyers rather than fast money. The second is the options market that formed around the fund, which gives traders ways to hedge positions and sell volatility against them. Both, he argued, would not exist in their current form without the spot ETF wrapper.
The numbers are striking on their face. A volatility reading in the 35-40 range sits near the level of a large-cap equity index fund, which is not how anyone would have described bitcoin at any point in its history before 2024. Back then, readings of 60 to 100 annualized were routine during even mild corrections, and every major crash sent them far higher.
From speculation to collateral
The more consequential point in his remarks was about how institutions actually use the position now. Jacobs said the dominant use case is no longer pure price exposure. Holders are pledging their IBIT shares as collateral for loans on real assets, from property to vehicles, and layering covered-call strategies on top of the position to generate income.
BlackRock has built a product for exactly that demand. The iShares Bitcoin Premium Income ETF, which trades under the ticker BITA, runs a covered-call strategy aimed at yield-seeking institutional buyers. Its launch signals that the firm sees the collateral trade as durable rather than fashionable. A covered-call fund only makes sense if a meaningful pool of investors plans to hold the underlying exposure for a long time.
Jacobs framed the broader change as a move away from a get-rich-quick story toward what he called a collateral narrative. Before the ETFs launched in January 2024, large allocators could simply ignore bitcoin because no compliant vehicle existed to buy it. Custody was a problem, accounting treatment was a problem, and board-level approval was nearly impossible without a regulated wrapper. He said internal portfolio discussions at major institutions have accelerated since, and that IBIT forced the conversation even at firms that once wanted none of it.
A structural bid, with a catch
The borrowing dynamic has a market consequence worth spelling out. An institution that has pledged its IBIT shares against a loan is a reluctant seller. Liquidating the position means unwinding the loan, so the holder is likely to absorb drawdowns rather than dump shares into them. Jacobs described this as a demand floor that did not exist before 2024, and there is some evidence for it in the flows: US spot bitcoin ETFs took in $433 million on Friday alone, led by Fidelity, as the price rebounded from $75,000 to above $81,000 over the past week.
The same structure cuts the other way in a deep bear market. If collateral values fall far enough, lenders issue margin calls, and the supposed floor turns into forced selling. Bitcoin’s own history shows cycles sharp enough to test that mechanism. The token fell 27% over the past year before this month’s rebound, and the 2022 drawdown exceeded 75% from peak to trough. Nobody knows how many IBIT-backed loans are outstanding, because the borrowing happens off the ETF itself, at banks and private lenders.
Volatility compression also has natural limits. A reading of 35-40 is low for bitcoin but still several times higher than the S&P 500, and nothing in the ETF structure prevents it from rising again if leverage builds in the other direction. The options market that dampens volatility in calm conditions amplifies it when everyone rushes to hedge at once.
What the numbers say
The claim tracks observable market data. Options pricing on IBIT and on offshore venues shows implied volatility well below the pre-ETF norms. Bitcoin traded near $79,000 on Sunday, up about 2% over the week, with open interest across major exchanges near $140 billion, a level that itself signals heavy derivatives activity. Traders are watching the $83,000 area, where Glassnode data shows roughly 1.05 million coins were last bought and where the next test of the rally sits.
For allocators, the practical takeaway is narrower than the headline. Lower volatility makes bitcoin easier to fit into risk budgets and easier to use as loan collateral, which is exactly the point Jacobs was making. It does not change what the asset is. BlackRock’s own platform partners still describe bitcoin as lacking the characteristics of a traditional asset class, and UK platforms require appropriateness assessments and a 24-hour cooling-off period before retail buyers can trade linked exchange-traded notes.
The half-life of this narrative will be tested by the next real drawdown. If institutions borrow against IBIT at scale and the price falls 40% or more, the market will find out quickly whether the collateral bid is a floor or a transmission channel for forced liquidation. Jacobs did not claim it was unbreakable. His argument was narrower: the structure has changed who holds the asset and why, and that is what has kept the price swings in check so far. Whether it survives the next stress event is a question the data will answer on its own.