A few of Bitcoin’s greatest holders, generally often called whales, have secretly moved billions of {dollars} price of cash into spot exchange-traded funds (ETFs).
On October 21, Bloomberg reported that these whales had executed roughly $3 billion in in-kind transfers via BlackRock’s iShares Bitcoin Belief (IBIT). As an alternative of promoting, they gave their Bitcoin to the ETF in change for fund shares. This can be a course of often called customized creation.
Notably, this transition was made doable by a July 2025 SEC coverage change authorizing the in-kind creation and redemption of crypto ETFs. The principles permit approved members at hand over the underlying bitcoin reasonably than money, aligning digital asset funds with the practices of commodity ETFs used for gold and oil.
In the meantime, the transfer indicators a structural shift that might redefine how flagship digital belongings perform inside international markets.
Bloomberg ETF analyst Eric Balciunas described this as a turning level, noting that even longtime crypto purists are recognizing the advantages of conventional finance.
he mentioned:
“Tradfi (particularly ETFs) is worse than cryptocurrencies assume.”
Why are Bitcoin whales turning to ETFs?
Nicolai Søndergaard, Analysis Analyst at Customs Nansen crypto slate The creation of the ETF will permit whales to defer taxes by exchanging the fund’s shares for Bitcoin.
In accordance with him, this can assist these cohorts preserve their BTC publicity with out promoting. He additionally identified that the transfer is “bullish as a result of it’s going to take away Bitcoin from circulation.”
Nonetheless, he mentioned, “The draw back is that you would be able to’t commerce 24/7 and it’s important to adhere to regular buying and selling hours, however in any case these whales are probably not energetic merchants.”
In the meantime, Bitunics analysts mentioned: crypto slate Bitcoin whales have interaction in these portfolio trades as a result of this transfer transforms their decentralized belongings into belongings acknowledged in conventional finance.
In accordance with them:
“This indicators a deeper stage of institutional consolidation within the crypto market. Bitcoin is evolving from a logo of opposition to a regulated asset class, and its capital effectivity and legitimacy are being redefined.”
For institutional traders, the ETF construction permits for leverage, compliance, and formal inclusion in multi-asset portfolios, making Bitcoin a viable liquidity factor alongside bonds and shares. ”
Nonetheless, they warning that this evolution comes with tradeoffs. As extra Bitcoin turns into locked up in ETFs, the market might cut up into two distinct tiers: regulated Bitcoin, which acts as a financialized collateralized asset, and on-chain Bitcoin, which maintains its decentralized and autonomous roots.
Cryptocurrency analyst Shanak Anslem Perera echoed this view, arguing that the ETF’s Bitcoin holdings are actually handled as margin collateral, are repo eligible, reserves stay cryptographically verifiable, and may be borrowed at rates of interest of round 4-6%.
Perera defined that this evolution has remodeled Bitcoin from a unstable transaction automobile to a practical monetary infrastructure that may assist lending and leveraged portfolios.
He claimed:
“This isn’t an ‘adoption’; it’s a monetary structure that rewrites itself in actual time, reprogramming decentralized shortage to allow centralized liquidity.”
Moreover, Alpha Architect founder Wes Grey instructed that the whales might have taken this motion to guard themselves from attackers. he mentioned:
“It is also good to keep away from the gun-wielding weirdo who reveals up at your own home and calls for you switch 10 bits or it is sport over.”
Notably, with BTC hitting a brand new all-time excessive this 12 months, the crypto business has seen a rise in wrench assaults concentrating on crypto holders.
How will this have an effect on Bitcoin?
Analysts at Bitfinex mentioned: crypto slate The rising wave of bodily ETF creation is impartial or bullish within the quick time period, however structurally bullish in the long run.
They defined that this pattern lays the muse for a monetary system the place Bitcoin’s decentralized shortage helps centralized liquidity.
With this in thoughts, they predicted that BlackRock’s iShares Bitcoin Belief (IBIT) belongings underneath administration (AUM) might develop from $86.8 billion to greater than $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 mechanically increase the ETF’s belongings underneath administration, strengthen circulating provide via chilly storage, and strengthen Bitcoin’s function as institutional-grade collateral.
Bitfinex added that even with out vital internet inflows, ETF holdings might develop one other 10-15% within the fourth quarter.
They famous that this dynamic might trigger a mechanical provide squeeze, as 12 BTC ETFs at the moment maintain roughly 1.35 million cash (or 6.8% of Bitcoin’s circulating provide). With fewer cash accessible on exchanges, small inflows can have a huge effect on worth discovery.
Coupled with the Fed’s continued financial easing (coverage charges at the moment vary from 4.00% to 4.25%), this discount in accessible provide might amplify upward momentum, pushing Bitcoin’s worth from round $108,000 now to round $140,000 by mid-2026.
