Bitcoin Whales Have Moved $5B Into BlackRock’s IBIT: Here’s Why

by Molly Poole



Security concerns around self-custody are increasingly pushing some Bitcoin holders toward institutional custody.

BlackRock has facilitated more than $5 billion in Bitcoin-for-ETF-share swaps from private wallets into its IBIT fund, after cutting the minimum size for such in-kind transactions to $1 million in July.

The shift gives investors a way to keep Bitcoin exposure while moving custody into a regulated ETF structure, with security concerns around self-custody adding to the appeal.

BlackRock Lowers Barrier for Bitcoin ETF Swaps

As noted in a report by Bloomberg, BlackRock’s iShares Bitcoin Trust first opened its in-kind creation process to private wallets with a $25 million minimum, a threshold that fell to $1 million in July.

IBIT’s total volume for these conversions has climbed past $5 billion, up from more than $3 billion when Bloomberg first reported on the trend last October. The process can take more than a week to complete, per Robbie Mitchnick, BlackRock’s head of digital assets, and inquiries are now coming in from clients both inside and outside the US.

Mitchnick tied the growth to security scares like kidnappings, ransom situations, and custody failures, saying those incidents “motivate them to make this switch for all or some of their holdings.”

Swapping Bitcoin for ETF shares also lets holders avoid triggering an immediate capital gains bill in many cases, since the BTC is exchanged rather than sold outright.

Bitwise has cut its own in-kind minimum from $100 million at launch to $50 million and now $3 million; chief investment officer Matt Hougan said the process now moves “more like a conveyor belt.”

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At Morgan Stanley, in-kind conversions make up an estimated 5% to 7% of the roughly $560 million MSBT fund per the report, though global ETF head Ally Wallace noted: “there is a lengthy education process related to this type of transaction.” Meanwhile, 21Shares has averaged around $5 million per in-kind transaction over the past three months, according to capital markets head Alistair Perry.

The mechanism has also spread past Bitcoin, with Grayscale and VanEck now processing in-kind trades for Ethereum (ETH), and Bitwise handling them for both ETH and Solana (SOL).

At Grayscale, in-kind now accounts for 62% of gross Bitcoin creations and 63% of Ethereum creations, up from 28% and 57% respectively in March, the firm’s head of trading and capital markets, Krista Lynch, told the publication.

Just This One Bottleneck

There’s one major issue in the backend that’s still holding up such swaps. Every in-kind trade still has to pass through an authorized participant or market maker willing to take custody of the crypto, which adds cost and helps explain why the service began with the very largest holders.

But the encouraging news is that issuers expect minimums to keep falling as more intermediaries build that capacity.

All that is happening with BTC climbing back above $81,000 for the first time since May, with its spot ETFs pulling in more than $2.5 billion since August 17, to bring the entire month’s total so far to just over $3 billion. This marks the funds’ biggest inflows since October 2025, with a few trading days still to go before the month is done.



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