Bitcoin whales, some of the largest holders in the crypto space, are making significant moves by transferring billions of dollars’ worth of coins into spot exchange-traded funds (ETFs) discreetly.
According to a report by Bloomberg on Oct. 21, these whales executed around $3 billion in in-kind transfers through BlackRock’s iShares Bitcoin Trust (IBIT). Instead of selling their Bitcoin, they opted to exchange it for fund shares through a process known as custom creation.
This shift was facilitated by a policy change by the SEC in July 2025, which allowed for in-kind creations and redemptions for crypto ETFs. This change enables authorized participants to deliver the underlying Bitcoin rather than cash, aligning digital-asset funds with commodity ETF practices for assets like gold or oil.
This transition represents a structural change that could redefine Bitcoin’s role in global markets.
ETF analyst Eric Balchunas from Bloomberg described this move as a pivotal moment, acknowledging the advantages of traditional finance even by long-time crypto enthusiasts.
He stated:
“Tradfi (ETFs in particular) is more badass than crypto thinks.”
Reasons for Bitcoin whales shifting to ETFs
Nicolai Søndergaard, a research analyst at Nansen, explained to CryptoSlate that ETF creations offer whales the opportunity to defer taxes by exchanging Bitcoin for fund shares.
He highlighted that this strategy allows these entities to maintain their BTC exposure without selling, which is seen as bullish as it reduces the circulating supply of Bitcoin.
While there are limitations such as trading hours for ETFs, it is believed that these whales are not frequent traders to be affected by this constraint.
Analysts at Bitunix mentioned to CryptoSlate that Bitcoin whales are engaging in these portfolio transactions to convert their decentralized wealth into assets recognized by traditional finance.
They stated:
“This signals a deeper level of institutional integration for crypto markets. Bitcoin is transitioning from a symbol of anti-establishment to a regulated asset class, reshaping its capital efficiency and legitimacy.”
However, this evolution may lead to a bifurcation in the market, with “regulated Bitcoin” serving as a financialized, collateral-bearing asset, and “on-chain Bitcoin” preserving its decentralized nature.
Crypto analyst Shanak Anslem Perera supported this view, emphasizing that ETF-held Bitcoin can now be utilized as marginable collateral, repo-eligible, and borrowable at competitive rates while maintaining cryptographic verification of reserves.
Perera elaborated:
“This isn’t ‘adoption.’ It’s monetary architecture rewriting itself in real time: decentralized scarcity reprogramming centralized liquidity.”
Additionally, Wes Gray, the founder of Alpha Architect, suggested that whales might be safeguarding themselves from potential threats by opting for ETFs.
“[It is] also nice to avoid the wacko dude with a gun who shows up to your house and demands that u transfer 10 btc or it’s game over.”
Notably, there has been a rise in wrench attacks targeting crypto holders following Bitcoin’s surge to a new all-time high this year.
Implications of the ETF shift on Bitcoin
Analysts at Bitfinex informed CryptoSlate that the increasing trend of in-kind ETF creations is expected to have a neutral to bullish impact in the short term, while being structurally bullish in the long run.
They noted that this trend sets the groundwork for a financial ecosystem where Bitcoin’s decentralized scarcity supports centralized liquidity.
As a result, they forecasted that assets under management (AUM) for BlackRock’s iShares Bitcoin Trust (IBIT) could exceed $100 billion by November, driven by tax-deferred conversions moving coins from self-custody to regulated funds.
While these conversions do not introduce new buying pressure, they mechanically increase ETF AUM, reduce the circulating supply through cold-storage custody, and solidify Bitcoin’s position as institutional-grade collateral.
Bitfinex also projected a potential growth of 10–15% in ETF holdings in Q4, even without substantial net inflows.
They highlighted that this scenario could trigger a supply squeeze as Bitcoin ETFs currently hold approximately 6.8% of the circulating supply, limiting coins available on exchanges and potentially influencing price discovery significantly.
With the Federal Reserve’s ongoing monetary easing and the reduced supply, there is a possibility of driving Bitcoin’s price from $108,000 to around $140,000 by mid-2026.
