A few of Bitcoin’s largest holders, popularly referred to as whales, are quietly transferring billions of {dollars}’ value of cash into spot exchange-traded funds (ETFs).
On Oct. 21, Bloomberg reported that these whales executed roughly $3 billion in in-kind transfers by way of BlackRock’s iShares Bitcoin Belief (IBIT). As an alternative of promoting, they handed their Bitcoin to the ETF in alternate for fund shares, a course of referred to as customized creation.
Notably, this migration was made potential by a July 2025 SEC coverage change approving in-kind creations and redemptions for crypto ETFs. The rule lets licensed contributors ship the underlying Bitcoin reasonably than money, aligning digital-asset funds with commodity ETF practices used for gold or oil.
In the meantime, this transfer presents a structural shift that would redefine how the flagship digital asset capabilities inside international markets.
Bloomberg ETF analyst Eric Balchunas described it as a turning level, noting that even long-time crypto purists acknowledge conventional finance’s benefits.
He stated:
“Tradfi (ETFs specifically) is extra badass than crypto thinks.”
Why are Bitcoin whales turning to ETFs?
Nicolai Søndergaard, a analysis analyst at Nansen, advised CryptoSlate that the ETF creations enable whales to defer taxes by swapping Bitcoin for fund shares.
In response to him, this helps these cohorts to protect their BTC publicity with out promoting. He additionally famous that the actions are “bullish as a result of it removes Bitcoin from circulation.”
Nevertheless, he identified that the “draw back will not be having the ability to commerce 24/7 and having to stay to regular buying and selling hours, however it’s probably that these whales aren’t lively merchants anyway.”
In the meantime, analysts at Bitunix advised CryptoSlate that Bitcoin whales have interaction in these portfolio trades as a result of the transfer transforms their decentralized wealth into belongings acknowledged by conventional finance.
In response to them:
“This marks a deeper section of institutional integration for crypto markets. Bitcoin is evolving from an anti-establishment image right into a regulated asset class, redefining its capital effectivity and legitimacy.
For institutional gamers, the ETF construction permits leverage, compliance, and formal inclusion inside multi-asset portfolios—making Bitcoin a viable liquidity part alongside bonds and equities.”
Nevertheless, they cautioned that this evolution comes with a trade-off. As extra Bitcoin turns into locked inside ETFs, the market might break up into two distinct layers, “regulated Bitcoin,” functioning as a financialized, collateral-bearing asset, and “on-chain Bitcoin,” sustaining its decentralized, autonomous roots.
Crypto analyst Shanak Anslem Perera echoed this view whereas arguing that the ETF-held Bitcoin can now be handled as marginable collateral, repo-eligible, and borrowable at charges round 4–6%, all whereas reserves stay cryptographically verifiable.
Perera defined that this evolution transforms Bitcoin from a risky buying and selling instrument right into a purposeful monetary infrastructure able to supporting lending and leveraged portfolios.
He claimed:
“This isn’t ‘adoption.’ It’s financial structure rewriting itself in actual time: decentralized shortage reprogramming centralized liquidity.”
As well as, Wes Grey, the founding father of Alpha Architect, instructed the whales may need taken these actions to guard themselves from attackers. He stated:
“[It is] additionally good to keep away from the wacko dude with a gun who reveals as much as your own home and calls for that u switch 10 btc or it’s sport over.”
Notably, the crypto trade has seen an uptick in wrench assaults focusing on crypto holders following BTC’s rise to a brand new all-time excessive this 12 months.
How will this affect Bitcoin?
Analysts at Bitfinex advised CryptoSlate that the rising wave of in-kind ETF creations is impartial to bullish within the quick time period however structurally bullish over the long term.
They defined that this development lays the inspiration for a monetary system the place Bitcoin’s decentralized shortage underpins centralized liquidity.
Contemplating this, they projected that BlackRock’s iShares Bitcoin Belief (IBIT) might see its belongings below administration (AUM) rise from $86.8 billion to over $100 billion by November, as tax-deferred conversions proceed to soak up cash from self-custody into regulated funds.
Whereas these swaps don’t create new shopping for strain, they broaden ETF AUM mechanically, tighten the circulating provide by way of cold-storage custody, and solidify Bitcoin’s position as institutional-grade collateral.
Bitfinex added that the ETF holdings might develop by one other 10–15% in This fall, even with out vital internet inflows.
They famous that this dynamic could set off a mechanical provide squeeze because the 12 BTC ETFs now maintain roughly 1.35 million cash (or 6.8% of Bitcoin’s circulating provide). With fewer cash accessible on exchanges, the marginal inflows might have an outsized affect on value discovery.
Coupled with the Federal Reserve’s ongoing financial easing (coverage charges presently between 4.00% and 4.25%), this contraction in accessible provide might amplify upside momentum, doubtlessly driving Bitcoin’s value from round $108,000 at present to roughly $140,000 by mid-2026.
