Bitcoin whales ditch self-custody for BlackRock's IBIT at record clip

BlackRock's head of digital assets says bitcoin whales are handing over their coins in exchange for shares of the iShares Bitcoin Trust at a rate the firm has never seen. “The current moment is the highest we've seen at any point,” Robbie Mitchnick told Barron's on Monday, describing demand for the swaps as one-directional and climbing. Of the reasons clients give, he said the biggest by far is security and peace of mind.

The deals are in-kind conversions: a holder delivers bitcoin to the fund through an intermediary and gets freshly created IBIT shares back, skipping the step of selling coins for cash first. Galaxy Digital, Talos and Virtu handle the transactions for BlackRock, and those firms — not the asset manager — set the minimum ticket. That floor started around $30 million and now sits between $1 million and $2 million, Barron's reported.

The path opened when the SEC voted on July 29, 2025 to let spot bitcoin and ether funds create and redeem shares in kind, scrapping the cash-only rule in place since the funds launched in January 2024. Barron's put the swap volume BlackRock has handled at $3.6 billion, though the true total may be higher because BlackRock doesn't process every conversion itself. Mitchnick gave Bloomberg a larger figure in August: more than $5 billion of such swaps at IBIT, up from more than $3 billion in October 2025. The fund held 795,921 BTC, worth roughly $60.4 billion, as of Nov. 6.

These conversions flatter headline flow numbers. An in-kind creation mints IBIT shares and counts toward reported inflows, but no bitcoin is bought on the open market — the coins already existed and just changed wrappers. Meanwhile cash is draining the other way: U.S. spot bitcoin ETFs shed about $1.28 billion in the week ended Nov. 6, their worst week since June, with IBIT responsible for roughly $1.21 billion of it, according to Farside Investors.

Mitchnick has been blunt about what's driving holders to his fund. In his August interview he pointed to “kidnappings, ransom, custody failures,” and told Barron's the recent Binance hack was old news to big holders. “Most large Bitcoin holders were already acutely aware of the risk of holding on an exchange and in a hot wallet,” he said. The threat list is long: French authorities have logged 77 crypto-linked kidnappings, extortion cases and home invasions in 2026 — more than all of 2025 — the OCCRP reported, citing the national organized crime prosecutor. Reuters reported last year that Ledger's co-founder lost a finger after being kidnapped with his wife, and the U.S. has seen its own cases, including a failed Connecticut plot to force a family to surrender bitcoin. Researcher Jameson Lopp keeps a public tally of physical attacks on holders going back to 2014, and the Coldcard bug in August added hardware wallets to the worry list.

BlackRock sweetens the trade with taxes and estate planning. Barron's wrote that swapping appreciated bitcoin into IBIT in kind “generally isn't seen as a sale that would trigger capital-gains taxes,” while Bloomberg warned that dodging an immediate bill hinges on the investor's own circumstances. Mitchnick said it's “much, much simpler” for clients to hold the exposure inside their private bank. Once converted, the coins rest with IBIT's custodian, a Coinbase Prime affiliate, in what he called an “institutional-grade cold-storage model.” Holders who make the switch hand over their private keys for a brokerage claim — the opposite of bitcoin's founding promise of money held without a bank.