Bitcoin Whales Shift Towards ETFs
Large holders of Bitcoin, often referred to as whales, who acquired the cryptocurrency during its early days, are increasingly converting their assets into exchange-traded funds (ETFs). Companies like BlackRock are actively seeking out these investors.
In a discussion with Bloomberg, Robbie Mitchnick, head of digital assets at BlackRock, shared that the company has facilitated the conversion of over $3 billion worth of Bitcoin into the iShares Spot Bitcoin ETF (IBIT).
Mitchnick explained that many of these whales, after years of managing their Bitcoin independently, are recognizing the advantages of maintaining their investments through established financial advisors and private banks. It’s interesting how this shift allows them to connect their wealth with conventional financial systems while still keeping a stake in Bitcoin (BTC), enabling better access to various investment and lending options.
This move is partly driven by recent changes in U.S. Securities and Exchange Commission regulations, which now allow for the in-kind creation and redemption of crypto ETFs. This means authorized participants can directly swap ETF shares for Bitcoin, rather than cash, streamlining large transactions and offering tax efficiencies for institutional players.
BlackRock’s IBIT has become the leading spot Bitcoin ETF in the U.S.—in June, it set a record by reaching $70 billion in assets under management faster than any ETF in history. That figure has climbed to over $88 billion, according to Bitbo data.
The trends highlighted by Mitchnick suggest a growing institutional acceptance of Bitcoin, 15 years after Satoshi Nakamoto initiated it with the first block, envisioning an asset centered around self-custody.
Supporters of early Bitcoin have long championed self-custody as the only reliable way to safeguard assets, a belief summed up in the phrase, “Not a key, not a coin.” Yet, the emergence of Bitcoin spot ETFs and corporate bond holdings seems to challenge this notion, hinting at a shift toward more traditional forms of custodial ownership.
While both spot Bitcoin ETFs and direct ownership cater to distinct types of investors, analyst Willy Wu noted in July that the growing demand for ETFs could be drawing interest away from self-custody. He pointed out that on-chain data indicates a recent decline in self-custodial Bitcoin, breaking a 15-year trend, which might signal a change in how investors approach their holdings.
Nonetheless, ETFs have paved the way for a kind of institutional investment in Bitcoin that was previously unattainable, impacting those early whales who once dominated the market through direct transactions.
