BlackRock IBIT Absorbs $5 Billion in Bitcoin as Whales Shift to ETFs

Large Bitcoin holders are increasingly moving their assets into regulated exchange-traded funds, with BlackRock’s iShares Bitcoin Trust (IBIT) emerging as a major destination for whale holdings.

Private in-kind exchanges through BlackRock IBIT have now surpassed $5 billion. The mechanism allows eligible Bitcoin holders to transfer BTC directly from personal wallets to the ETF in exchange for fund shares. The original cost basis of the Bitcoin is carried over to those shares, allowing investors to restructure their exposure without an immediate taxable sale.

Demand accelerated after BlackRock lowered the minimum threshold for in-kind conversions from $25 million to $1 million in July. The change significantly broadened access for large investors and prompted competitors to respond. Bitwise subsequently reduced its own conversion minimum from $100 million to $3 million as ETF providers competed for institutional Bitcoin capital.

BlackRock’s head of digital assets said security concerns are also contributing to the migration. Hacking incidents, challenges associated with self-custody and physical threats such as ransom demands are encouraging wealthy Bitcoin investors to favor regulated institutional custody.

The shift comes as Bitcoin whales continue selling on exchanges, creating supply that major funds can absorb away from public trading venues. Bitcoin was trading around $78,456 after recently reaching a local high of $81,304, while IBIT stood at $44.72.

Institutional demand extended beyond Bitcoin. BlackRock’s Ethereum ETF, ETHA, recorded $131.94 million in session inflows, while Solana climbed above $100 as weekly non-vote transactions reached a record 1.318 billion.

Meanwhile, mixed U.S. economic data added short-term pressure to crypto markets. Annual core PCE inflation matched expectations at 3.3%, but headline PCE reached 3.7%, slightly above the 3.6% forecast. Second-quarter GDP remained at 1.5%, while the GDP deflator rose to 6.4%.

Persistent inflation could restrain near-term crypto buying ahead of Federal Reserve Chair Kevin Warsh’s Friday speech. However, growing Bitcoin ETF adoption suggests institutional capital is becoming an increasingly important force in the cryptocurrency market.