Large Bitcoin holders, often referred to as whales, who acquired the cryptocurrency in its early days, are increasingly transferring their assets into exchange-traded funds (ETFs), with companies like BlackRock actively seeking their involvement.
In a conversation with Bloomberg, Robbie Mitchnick, BlackRock’s head of digital assets, revealed that the firm has facilitated over $3 billion in conversions into its iShares spot Bitcoin ETF (IBIT).
After years of managing their own holdings, many whales are now recognizing the “convenience of integrating their exposure within existing relationships with their financial advisers or private banks,” Mitchnick added.
This transition enables them to retain Bitcoin (BTC) exposure while merging their wealth into the established financial system, providing easier access to wider investment and lending options.
Mitchnick partly credited this trend to a recent change in regulations by the US Securities and Exchange Commission that allows for in-kind creations and redemptions for crypto ETFs. This update permits authorized participants to swap ETF shares directly for Bitcoin instead of cash, enhancing the efficiency and tax-friendliness of large-scale conversions for institutional investors.
BlackRock’s IBIT has become the leading product among the various spot Bitcoin ETFs approved in the United States. In June, IBIT achieved the milestone of being the fastest ETF ever to exceed $70 billion in assets under management—a figure that has now risen to over $88 billion, according to Bitbo data.
Related: BlackRock sees record quarter for iShares ETFs as Bitcoin, Ether demand surges
Not your keys, not your coins?
The trend highlighted by Mitchnick emphasizes the increasing institutionalization of Bitcoin, more than 15 years after Satoshi Nakamoto mined the first block and envisioned a bearer asset based on the principle of self-custody.
Advocates of early Bitcoin have consistently argued that self-custody is the only secure method to protect one’s funds—a fundamental belief encapsulated in the phrase, “not your keys, not your coins.”
However, the emergence of spot Bitcoin ETFs and corporate treasury holdings is challenging that principle, indicating a transition towards more traditional, custodial ownership models.
While spot Bitcoin ETFs and direct purchases aren’t necessarily competing with each other—each catering to different types of investors—analyst Willy Woo noted in July that the demand for ETFs might have diverted interest from self-custody.
Onchain statistics reveal that self-custodied Bitcoin has recently halted a 15-year upward trend, potentially signaling a shift in investor behavior.
Nevertheless, ETFs have facilitated a level of institutional engagement in Bitcoin that was previously unattainable. This evolution has impacted early whales, who once manipulated markets through their direct transactions.
Related: Bitcoin creator Satoshi Nakamoto is the world’s 11th richest person
