BlackRock is seeing record demand from large Bitcoin holders who want to convert their existing BTC into shares of the iShares Bitcoin Trust, even as the fund continues to experience daily net outflows.
The asset manager has facilitated roughly $3.6 billion in Bitcoin-to-IBIT conversions since U.S. regulators approved in-kind creations and redemptions for crypto exchange-traded products in July 2025.
According to BlackRock’s head of digital assets, Robbie Mitchnick, security concerns are becoming one of the main reasons wealthy and institutional investors choose to move from direct Bitcoin custody into regulated ETF shares.
The trend highlights an important distinction in the Bitcoin ETF market: investors can move existing BTC into an ETF structure even while the fund is recording net withdrawals overall.
BlackRock reports $3.6 billion in Bitcoin-to-IBIT conversions
BlackRock has recorded approximately $3.6 billion in Bitcoin converted into IBIT shares since in-kind transfers became available.
Mitchnick said demand has reached its highest level so far.
The figure may not capture every conversion because some transactions are arranged through intermediaries rather than processed directly by BlackRock.
Large Bitcoin holders are increasingly using the service to change how they hold their exposure rather than exiting Bitcoin entirely.
Instead of keeping coins in a personal wallet or institutional custody account, eligible investors can transfer BTC into the ETF structure and receive IBIT shares in return.
Security concerns are driving large Bitcoin holders toward ETFs
Mitchnick said security and peace of mind are among the biggest reasons investors are using the conversion service.
Holding Bitcoin directly requires investors to manage issues such as:
- Private keys
- Wallet security
- Custody arrangements
- Recovery procedures
- Counterparty exposure
- Operational safeguards
For investors holding millions of dollars in Bitcoin, a mistake involving a private key or wallet infrastructure can have serious consequences.
ETF shares allow those investors to maintain exposure to Bitcoin while holding the position through a traditional brokerage or investment account.
Bitcoin whales are changing custody, not necessarily selling
A Bitcoin-to-IBIT conversion should not automatically be interpreted as new buying.
The investor already owns Bitcoin before the transaction takes place.
During the conversion, that BTC moves into the ETF structure and the investor receives shares representing the same underlying exposure.
The process therefore changes the form in which Bitcoin is held.
It does not necessarily introduce new money into the crypto market.
This distinction is important when comparing conversion demand with ETF inflows.
IBIT conversions involve approved intermediaries
BlackRock does not carry out every Bitcoin conversion directly with investors.
The transactions involve authorized participants and other approved firms that help create ETF shares.
BlackRock works with companies including Galaxy Digital, Talos and Virtu to facilitate the process.
Eligible investors transfer Bitcoin through the approved structure, and ETF shares are created in exchange.
The exact minimum transaction size can vary depending on the intermediary being used.
Conversion minimums have fallen sharply
When in-kind conversions first became available, the practical threshold was much higher.
Some transactions reportedly required around $30 million in Bitcoin.
That made the process accessible mainly to very large institutions and ultra-wealthy crypto holders.
During 2026, the practical minimum fell to roughly $1 million to $2 million through some providers.
This has significantly expanded the group of investors that can potentially use the service.
Lower thresholds could bring more Bitcoin holders into IBIT
A $30 million minimum limits the conversion process to a very small number of investors.
A threshold closer to $1 million opens the service to family offices, crypto entrepreneurs, professional investors and smaller institutions.
This could help explain why BlackRock is seeing record demand.
The convenience of holding ETF shares inside a brokerage account may become increasingly attractive as the conversion process becomes accessible to a wider group.
IBIT is still experiencing heavy outflows
Record conversion activity is happening at the same time that IBIT is seeing persistent net withdrawals.
BlackRock’s fund recorded approximately $213.2 million in outflows on November 9.
That marked its seventh consecutive trading session of net withdrawals.
Since October 30, IBIT has reportedly recorded around $1.66 billion in net outflows.
This shows why conversion activity and ETF flow data need to be analyzed separately.
U.S. Bitcoin ETFs lost $201 million on November 9
Across the broader U.S. spot Bitcoin ETF market, net outflows reached approximately $201 million on November 9.
BlackRock accounted for most of the selling.
Morgan Stanley’s MSBT attracted around $22.1 million in inflows, partially offsetting withdrawals elsewhere.
The previous trading session was even weaker.
U.S. spot Bitcoin ETFs recorded approximately $411.9 million in net outflows, including around $403 million from IBIT alone.
IBIT accounted for most early-November ETF withdrawals
During the first trading week of November, U.S. spot Bitcoin ETFs reportedly experienced around $1.28 billion in net withdrawals.
IBIT accounted for approximately $1.21 billion of that total.
The withdrawals came as Bitcoin traded close to $75,000 and investors continued reassessing risk following a volatile period for cryptocurrency markets.
Despite those outflows, BlackRock says demand for converting existing Bitcoin into ETF shares has remained strong.
Why conversions and ETF outflows can happen together
The two trends may seem contradictory, but they measure different activities.
Consider an investor who already owns $5 million worth of Bitcoin.
That investor can transfer the BTC into IBIT and receive ETF shares.
The transaction changes the custody structure but does not necessarily add $5 million of fresh investment demand.
At the same time, another IBIT investor might redeem $10 million of shares.
The fund can therefore experience net outflows even while some Bitcoin holders are actively converting their coins into ETF positions.
Daily ETF flows measure creations and redemptions
ETF flow data generally shows the net difference between money entering and leaving investment products.
In-kind conversions are more specific.
They involve an investor delivering the underlying cryptocurrency in exchange for ETF shares.
These activities overlap with the ETF creation system but should not automatically be interpreted as equivalent measures of demand.
A conversion can represent a change in custody preference rather than a new decision to gain Bitcoin exposure.
SEC approved in-kind crypto ETF transfers in 2025
The U.S. Securities and Exchange Commission approved in-kind creations and redemptions for crypto exchange-traded products on July 29, 2025.
Before that decision, U.S. spot Bitcoin and Ethereum ETFs generally relied on cash-based processes.
Under the previous model, authorized participants typically delivered cash when creating fund shares.
The ETF provider or its partners would then acquire the underlying cryptocurrency.
The in-kind framework allows the cryptocurrency itself to be delivered.
In-kind transfers bring crypto ETFs closer to traditional commodity funds
In-kind creation and redemption mechanisms are commonly used in traditional commodity ETFs.
The SEC’s decision brought crypto products closer to those established structures.
Authorized participants can now deliver Bitcoin to create ETF shares.
They may also receive Bitcoin when redeeming shares, depending on the fund and transaction structure.
The SEC said the changes could improve efficiency and reduce costs.
Investors can move Bitcoin into brokerage accounts without selling first
One of the biggest advantages of in-kind conversion is that an eligible Bitcoin holder may not need to sell BTC for cash before obtaining ETF shares.
Under a cash-only process, an investor could have needed to:
- Sell Bitcoin.
- Move the proceeds into a brokerage account.
- Purchase IBIT.
With an in-kind process, Bitcoin itself can be used as part of the ETF creation.
That reduces the number of separate transactions involved.
ETF shares can be easier to integrate with traditional wealth management
Once investors hold IBIT shares, the position can sit alongside stocks, bonds and other investments in a conventional securities account.
Depending on the investor and account structure, ETF shares may be easier to incorporate into:
- Portfolio management
- Collateral arrangements
- Estate planning
- Options strategies
- Institutional reporting
- Wealth-management platforms
For large Bitcoin holders, these operational benefits can be significant.
Tax treatment still depends on the transaction structure
An in-kind conversion does not automatically mean the transaction is tax-free.
The tax consequences depend on the specific arrangement and the investor’s circumstances.
Different jurisdictions may treat transfers, contributions and fund creations differently.
Investors using in-kind conversions may therefore need tax and legal advice specific to their situation.
The operational convenience of converting BTC into ETF shares should not be confused with guaranteed tax neutrality.
BlackRock’s demand shows institutional custody is evolving
The rise in conversions reflects a broader change in how large investors think about Bitcoin custody.
For years, self-custody was viewed by many crypto investors as the preferred way to hold digital assets.
Institutional adoption has created additional priorities.
Large investors may value:
- Insurance
- Regulated custody
- Brokerage integration
- Operational controls
- Easier reporting
- Institutional security procedures
ETF structures can address some of these requirements.
Self-custody still gives investors greater direct control
Moving Bitcoin into an ETF also involves trade-offs.
A self-custodied Bitcoin holder directly controls the keys associated with their coins.
An ETF investor owns shares representing an interest in a fund that holds Bitcoin through institutional custody arrangements.
The investor therefore gains convenience but gives up direct control over the underlying BTC.
Which structure is preferable depends on the investor’s priorities.
Security incidents are increasing interest in institutional custody
The crypto industry has experienced several major security incidents involving exchanges, wallets and decentralized platforms.
These events can influence how large holders think about custody risk.
For someone holding a very large Bitcoin position, technical expertise alone may not eliminate operational risk.
ETF structures can shift much of that responsibility toward institutional custodians and regulated intermediaries.
Mitchnick said this desire for increased security is one of the main reasons conversion demand has risen.
Grayscale has expanded in-kind transfers as well
BlackRock is not the only asset manager offering direct crypto contributions.
Grayscale expanded in-kind transfers across ten digital asset investment products in October.
The eligible products include exposure to:
- Bitcoin
- Ethereum
- Solana
- XRP
- Avalanche
- Chainlink
- Dogecoin
- Hyperliquid
- Sui
- Zcash
This indicates that in-kind crypto investment structures are expanding beyond Bitcoin.
Grayscale minimums vary significantly by product
Grayscale’s published minimum contribution amounts differ depending on the investment product.
As of October 20, minimums reportedly ranged from around $80,300 for its Solana Staking ETF to approximately $364,800 for the Bitcoin Mini Trust ETF.
Those amounts remain significant but are much lower than the earliest practical minimums associated with some institutional Bitcoin conversion services.
Falling thresholds could make direct crypto-to-fund contributions increasingly accessible.
Cybersecurity concerns are influencing traditional investment products
Grayscale has also cited cybersecurity threats as one reason institutional custody is becoming more important.
Large digital asset holders face risks across several environments.
Self-custody can expose investors to key-management mistakes.
Centralized exchanges can face operational breaches.
DeFi protocols can suffer smart contract or governance exploits.
Regulated investment products offer another way of managing those risks, although they introduce dependence on custodians and financial intermediaries.
ETF ownership and Bitcoin ownership remain economically connected
IBIT is designed to track the value of Bitcoin.
That means an investor converting BTC into IBIT generally maintains exposure to Bitcoin’s price.
However, there are important structural differences.
The investor owns ETF shares rather than coins in a wallet.
The fund handles custody and operational processes.
ETF trading also follows securities market infrastructure and operating hours, while Bitcoin itself trades continuously.
The two forms of ownership therefore provide similar price exposure through different mechanisms.
Why large Bitcoin holders may prefer ETF shares
For a retail crypto user holding a small amount of Bitcoin, self-custody may be manageable.
For an institution holding hundreds of millions of dollars, custody becomes much more complicated.
Companies may need:
- Multiple approval systems
- Segregated duties
- Insurance arrangements
- Auditable controls
- Regulatory reporting
- Disaster recovery procedures
Using an ETF can outsource many of these responsibilities.
That can make IBIT attractive even to investors who were originally comfortable holding Bitcoin directly.
ETF outflows do not mean Bitcoin whales are abandoning exposure
The latest data also shows why ETF outflows need careful interpretation.
Some investors are withdrawing from IBIT.
At the same time, other large Bitcoin holders are moving directly into the fund.
The result is a market where different groups are making very different decisions.
A headline showing ETF outflows does not necessarily mean all institutional demand is disappearing.
Likewise, record conversion activity does not mean new capital is flooding into Bitcoin.
What BlackRock’s conversion demand actually tells us
The strongest conclusion is that large holders increasingly see regulated ETFs as a viable custody structure for Bitcoin exposure.
That is different from saying they are buying additional Bitcoin.
Many conversion users already owned the BTC.
Their decision is about how they want to hold the asset.
For BlackRock, that still represents meaningful institutional adoption because more large Bitcoin positions are moving into its investment structure.
What to watch next
Several indicators will show whether the trend continues.
The first is total Bitcoin-to-IBIT conversion volume.
If BlackRock’s $3.6 billion figure continues rising quickly, it would suggest growing preference for ETF-based custody.
The second is IBIT’s daily flow data.
A return to net inflows would indicate fresh demand entering the fund in addition to custody conversions.
Bitcoin’s price will also matter.
A stronger market could encourage both ETF subscriptions and additional conversions.
Final thoughts
BlackRock is seeing record interest from Bitcoin whales looking to convert self-custodied BTC into IBIT shares, with reported conversions totaling about $3.6 billion.
Security and custody concerns appear to be a major driver of that demand.
At the same time, IBIT is experiencing a prolonged period of net outflows, demonstrating that the two trends are not mutually exclusive.
In-kind conversions mainly show how existing Bitcoin holders are changing the structure of their exposure.
Daily ETF flows show whether capital is entering or leaving the fund overall.
Together, the data suggests that institutional Bitcoin ownership is becoming more sophisticated.
Some investors are reducing ETF exposure, while others are moving large self-custodied positions into regulated investment products.
For BlackRock, record conversion demand may ultimately be less about investors deciding whether to own Bitcoin and more about deciding how they want to hold it.
