IBIT Vs. BTCI: Why I'm Choosing Pure Beta For The $150K Bitcoin Target

Summary The goal of this article is not to debate the merits of Bitcoin itself, but to determine how each fund performs across different market cycles. With my 2026 Bitcoin price target set at $130,000-$150,000, I currently maintain a 'Buy' rating on IBIT. In this analysis, you will discover why BTCI’s high-yield options strategy inherently leads to gradual NAV erosion. That said, despite these long-term risks, BTCI emerged as the 'underdog winner' of the 2025 battle, outperforming IBIT in total return during that period. Investment thesis Despite the fact that comparing the iShares Bitcoin Trust ETF ( IBIT ) and the NEOS Bitcoin High Income ETF ( BTCI ) implies a clash between two different investment philosophies (clean growth versus cash flow generation), it is important for me, like many investors interested in the cryptocurrency industry, find out which of these instruments will be better suited to the potential Bitcoin trend in 2026. IBIT allows you to play on the pure movement of the first cryptocurrency, which has a beta of 1.00x, but BTCI can generate cash flow during sideways market periods, distributing it among investors in the form of high dividend yields. Nevertheless, one must consider which of these assets may not only have a higher Total Return but also a deeper drawdown. This topic should resonate not only with crypto enthusiasts but also with conservative, income-oriented investors. Fundamental similarities between IBIT and BTCI The key similarity between IBIT and BTCI is their investment concept, based on investing in Bitcoin. Even though they're different, the two have a strong foundation in common. On top of that, these funds help solve the technical challenges of buying, storing, and selling crypto. Custodians store assets in the world's most trusted and secure storage facilities. This means that investments in these ETFs are not subject to the risks faced by those who buy Bitcoin directly. Another advantage is that both are available for IRA and 401k accounts and issue the standard 1099 form for tax purposes. Fundamental differences between IBIT and BTCI That said, this is where the fundamental similarities between IBIT and BTCI end. Closer analysis of the funds reveals criteria that distinguish them from one another. Firstly, their fundamental structure differs, which highlights the differences in their portfolio composition. The IBIT is built on physical ownership of Bitcoin, so each share of the fund is backed by the amount of cryptocurrency stored in a custodial vault. As the operator, Coinbase Custody was chosen, as it uses cold storage technology (hardware wallets), the highest level of security for crypto assets. One advantage of investing in IBIT rather than physical Bitcoin is that this ETF eliminates the hassle of verifying accounts on crypto exchanges and wallets, as well as buying/selling and storing cryptocurrency, such as keeping a private key. Holdings Breakdown of IBIT BTCI has a completely different portfolio, since this fund is focused on generating a consistently high income without being tied to the market cycle of the Bitcoin chart. Fund managers use the high volatility of cryptocurrencies to generate returns, then distribute them to investors as dividends. That's why IBIT has passive investment management, but BTCI has pretty active management. Fund managers constantly make operational decisions to generate cash flow, actively selecting strike prices and expiration dates for call options. BTCI's main strategy is based on using Bitcoin's implied volatility. Higher market volatility means higher option prices, resulting in higher income generation. BTCI's portfolio is only 24% based on the underlying asset (Bitcoin). The rest of the portfolio consists of option contracts and government bonds that let you mimic owning Bitcoin and generate monthly income for shareholder payouts. That said, the BTCI allows for synthetic exposure to Bitcoin. That is, while the underlying asset itself grows, so do the fund's earnings, although its growth potential is limited due to the call options sold. Utilizing positions through other Bitcoin ETFs, this fund applies its call option selling strategy to them. Due to this, fast growth of the cryptocurrency does not allow BTCI to get similar returns. A part of the profit from the price growth is cut off, which is a disadvantage for such a fund during a strong bullish trend. Nevertheless, in periods of sideways market, it is the best choice. Holdings Breakdown of BTCI Another difference between IBIT and BTCI is their dividend policy, since IBIT has no dividends at all (logical given that it physically holds Bitcoin in Coinbase's custodial storage), and BTCI has a high dividend yield of 37.41%. Nevertheless, these returns are primarily due to a decline in share prices. Payments from this fund are decreasing. Dividends have decreased from $1.57 to $1.04 between January 2025 and January 2026 (an overall decrease of 33.8%). Dividend History of BTCI To supplement the analysis of dividend policy, we would like to separately consider the issue of tax efficiency, since BTCI pays almost 100% of its dividends in the form of Return of Capital. As an example, Form 19a-1 for January 2026 indicates that 96% of dividends consist of ROC. The other form, 8937 , published only in May 2025, shows that the ROC share is 91.55%. In one way, the way the dividends are paid out makes it really tax-efficient for investors. But on the other hand, this return of capital highlights the problem of capital erosion risk, as the fund doesn't generate enough profits from options to pay all dividends. IBIT and BTCI comparison table A comparison table based on key criteria is provided below to help you understand the difference between IBIT and BTCI. Both qualitative indicators and quantitative metrics are reflected here. Criteria IBIT BTCI Issuer iShares Delaware Trust Sponsor LLC NEOS Investment Management LLC Primary Goal Maximum Growth (Beta) Cash Flow (Income) Mechanism Spot Ownership Spot + Selling Call Options Behavior in a Bull Market Ideal (takes all growth) Lagging (upside is limited) Behavior in a Flat Zero Positive (premium collection) Risk Market-Related Risk Market-Related Risk + Lost Profit Risk Number of Holdings 1 5 Assets in Top 10 100% 100% P/NAV 1.00х 1.07х Expense Ratio 0.12% 0.99% AUM $64.80В $1.07В Dividend Yield (TTM) None 37.41% Dividend frequency None Monthly Return of Capital None 91% - 96% Beta to Bitcoin 1.00х ~0.45 - 0.60 Total Return, 1М -4.70% -3.89% Total Return, 6М -28.45% -24.44% Total Return, 1Y -20.48% -15.11% For each ETF comparison, my primary focus is on Total Return values . The results for IBIT and BTCI are negative. Total Return for the past year was -20.48% and -15.11%, respectively. Therefore, over the past month and six months, the BTCI has been less loss-making. But that doesn't mean we'll see similar results in 2026, because the Bitcoin market cycle could be different. In order to estimate the potential return for next year, let's look at the impact of possible Bitcoin price growth/decline scenarios to see which of these funds fits your risk/return profile. Total Return, 1Y Forecast of IBIT and BTCI performance during different Bitcoin market cycles When comparing IBIT and BTCI, one of my main goals was to figure out how each fund's returns change during different Bitcoin market cycles. If everything is quite simple with IBIT, because the fund has a beta of 1.00x, with BTCI it is completely different, as this ETF is based on an option strategy with active position management. A table below shows different Bitcoin price scenarios, analyzing the behavior of BTCI and the resulting impact on Total Return compared to IBIT. Bitcoin at $75,000 was chosen as an example of the current price. Bitcoin Price BTCI Behavior Summary $50,000 Capital erosion follows the Bitcoin price decline. Sold call options expire out-of-the-money, softening the decline by 3%–5%. BTCI outperforms IBIT by 3%–5%, causing IBIT's total return to be -33% and BTCI's to be -28%–30%. $75,000 BTCI maintains its capital integrity, and dividends are generated through payments that are generated during Bitcoin volatility. Total Return at IBIT is around 0%, while at BTCI it is +5%. $100,000 BTCI is growing slower than the price of Bitcoin since call options are sold with a delta of 0.15–0.25. In the end, BTCI takes ~60-70% of the growth but pays dividends. Total Return at IBIT is 33%, whereas at BTCI it is around 25%-28%. $150,000 For BTCI, this is the worst-case scenario in terms of lost profit growth potential, since due to the rapid rally in Bitcoin, the strike prices of sold options are significantly lower. The NAV is frozen in place or growing extremely slowly. Total Return IBIT reaches +100%, whereas BTCI can only show +40-50%. Risks of the investment thesis IBIT investments are highly dependent on Bitcoin price growth. The market will not strive to return to an upward trend; regardless of the actions taken, the results will be negative. Investing in BTCI carries the main risk of cutting profits when Bitcoin prices potentially rise. Given its lower beta to the leading cryptocurrency, the spot ETF will generate higher returns during any bullish rally. It will therefore be more difficult for it to recoup its previous losses incurred in 2025 than it will be for IBIT. Additionally, BTCI is exposed to the risk of capital erosion. For as long as the fund pays high dividends without generating sufficient profits from its option strategy, its NAV will erode. It creates negative conditions for the future, because a smaller amount of capital only complicates the generation of previous income, forcing further reductions in dividends. Consequently, the BTCI may eventually lose its status as a high-yield ETF, which would result in an outflow of AUM. Conclusion The results of the comparative analysis between IBIT and BTCI reveal fundamental differences between them. I predict that by 2026, the price of Bitcoin will hit a new all-time high and could reach between $130,000 and $150,000. That means I'd go with IBIT this year, as its Total Return will be way higher than BTCI, whose gains come from a sideways market. My recommendation for each of these funds would therefore be "Buy" and "Hold" respectively. Importantly, it is important to understand that the choice between IBIT and BTCI is not a bet "for or against Bitcoin." This is merely a choice of risk/return profile, in which spot ETF investors bet on cryptocurrency capitalization, whereas option ETF investors bet on successfully exploiting volatility.