Long-time Bitcoin whales, once staunch advocates of self-custody, are gradually shifting their strategy by trading their private keys for the conveniences offered by traditional finance. According to recent disclosures from a BlackRock executive, some of Bitcoin’s earliest holders are quietly converting portions of their spot Bitcoin holdings into exchange-traded funds (ETFs), unlocking access to a wider array of wealth management resources. This transition marks a significant change in the crypto landscape, as onchain data reveals a break in a 15-year uptrend of self-custodied Bitcoin holdings, coinciding with the rapid adoption of spot ETFs.
BlackRock’s head of digital assets, Robbie Mitchnick, highlighted that the firm has already facilitated over $3 billion in these conversions, driven by clients’ desire to integrate their crypto exposure within existing financial advisory and private banking frameworks. A recent US Securities and Exchange Commission rule change allowing in-kind creations and redemptions for Bitcoin ETFs has accelerated this trend, enabling funds to exchange ETF shares directly for Bitcoin rather than cash.
BlackRock’s iShares Bitcoin Trust (IBIT) continues to dominate the spot Bitcoin ETF market, managing over $88 billion in net assets, underscoring the significant influx of investor interest into these instruments.
This shift among Bitcoin whales reflects a broader trend of integrating crypto assets into traditional financial systems, balancing the trade-off between relinquishing self-custody and gaining enhanced financial flexibility and services.
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