Bitcoin Whales Are Moving Holdings Into ETFs as BlackRock Hits $5B Swap Milestone

Bitcoin whales are now swapping their BTC holdings for shares in exchange-traded funds as capital returns to the market. BlackRock's spot Bitcoin ETF, IBIT, has now processed more than $5 billion worth of these conversions, according to Bloomberg ETF analyst Eric Balchunas. That number climbed sharply from about $3 billion recorded back in October.

BlackRock has now done $5b of tax deferred bitcoin to ETF swaps, which can now be done for as little as $1mil.. “It’s going to keep growing because we keep expanding the access,” said Robbie Mitchnick, head of digital assets at BlackRock. “People see things happen in the outside… https://t.co/lnhFLeVklM

— Eric Balchunas (@EricBalchunas) August 25, 2026

Why are Bitcoin whales swapping their holdings?

The jump in activity comes after BlackRock made it far simpler for investors to move their coins into its fund. In July, the firm slashed the minimum size for these private in-kind conversions from $25 million down to $1 million. This welcomed a much wider group of investors.

The process works through what's called in-kind creation. Investors can hand over their Bitcoin into the fund and receive shares in return instead of selling it for cash and then buying ETF shares. 

Because there is no cash sale, the transaction can be done as often as possible without triggering an immediate capital-gains tax bill. This capital shift after Bitcoin posted its largest weekly gain in 3 years.

Robbie Mitchnick, head of digital assets at BlackRock, said demand for this kind of conversion has been rising thanks to the easier access. 

"It's going to keep growing because we keep expanding the access," he said, adding that security scares are pushing more holders to make the switch. 

The concerns are not far-fetched. There have been a series of kidnappings, hacks, and custody failures tied to crypto wealth in recent months. Hardware wallet exploits in August alone led to losses between $116 million and $130 million.

This prompted old worries about the risks of managing your own private keys, especially for people whose net worth is reliant on Bitcoin.

Rival funds see the same pattern as BlackRock

Other asset managers have also reported this new shift. Bloomberg's reporting found a similar pattern on Bitwise's BITB fund. 

At Morgan Stanley, in-kind conversions now make up 5% to 7% of total holdings in its spot Bitcoin ETF, MSBT, according to Ally Wallace, the firm's global head of ETFs. She noted that these deals still take time to close. 

"We have had some trades like this come to fruition but there is a lengthy education process related to this type of transaction which takes time and results in a longer lead time," she said.

At Bitwise, the minimum deal size needed to attract market-maker support has fallen too. It declined from $100 million for its very first in-kind transaction down to just $3 million today. Matt Hougan, the firm's chief investment officer, said the process is becoming far more routine than it used to be. 

"The whole process is still bespoke, from introducing a client to a market maker to working with the adviser, but it's becoming more standardized," he said.

Smaller firms are seeing steady interest as well. For 21Shares, completed in-kind transactions have averaged about $5 million in size over the past three months, according to Alistair Perry, the firm's head of capital markets. 

BlackRock had shared in its Q2 earnings call that the firm aims to generate $500 million in annual digital asset revenue by 2030. This growing swap business looks to be quite aligned with that plan.