Bitcoin whales swap BTC for ETFs to shield wealth from threats

A few of Bitcoin’s largest holders, colloquially referred to as whales, are quietly shifting billions of {dollars} value of cash into spot exchange-traded funds (ETFs).

On October 21, Bloomberg reported that these whales executed roughly $3 billion in in-kind transfers by means of BlackRock’s iShares Bitcoin Belief (IBIT). As a substitute of promoting, they handed over their Bitcoin to the ETF in trade for fund shares, a course of referred to as tailoring.

Notably, this migration was made potential by an SEC coverage change in July 2025, approving in-kind creations and redemptions for crypto ETFs. The rule permits licensed members to provide the underlying Bitcoin in lieu of money, aligning digital asset funds with the practices of commodity ETFs used for gold or oil.

In the meantime, this transfer presents a structural shift that might redefine how flagship digital property perform inside international markets.

Bloomberg ETF analyst Eric Balchunas described it as a turning level, noting that even longtime crypto purists acknowledge the advantages of conventional finance.

He mentioned:

“Tradfi (significantly ETFs) is cooler than crypto thinks.”

Why Are Bitcoin Whales Turning to ETFs?

Nicolai Søndergaard, a analysis analyst at Nansen, advised us CryptoSlate that the ETF creations enable whales to defer taxes by exchanging Bitcoin for fund shares.

Based on him, this helps these cohorts preserve their publicity to BTC with out promoting. He additionally famous that the actions are “bullish as a result of it takes Bitcoin out of circulation.”

Nevertheless, he identified that the “drawback is that you just can’t commerce 24/7 and you must follow regular buying and selling hours, however it’s probably that these whales should not energetic merchants anyway.”

In the meantime, analysts from Bitunix mentioned CryptoSlate that Bitcoin whales have interaction in these pockets transactions as a result of this step converts their decentralized wealth into property acknowledged by the standard monetary world.

Based on them:

“This marks a deeper section of institutional integration for crypto markets. Bitcoin is shifting from an anti-establishment image to a regulated asset class, redefining its capital effectivity and legitimacy.

For institutional gamers, the ETF construction allows leverage, compliance and formal inclusion inside multi-asset portfolios, making Bitcoin a viable liquidity part alongside bonds and equities.”

Nevertheless, they warned that this evolution comes with a trade-off. As extra Bitcoin turns into locked into ETFs, the market might cut up into two distinct tiers: “regulated Bitcoin,” which capabilities as a financialized, collateral-bearing asset, and “on-chain Bitcoin,” which retains its decentralized, autonomous roots.

Crypto analyst Shanak Anslem Perera echoed Supporting this view, it argues that Bitcoin held by the ETF can now be handled as marginal collateral, eligible for repos and borrowed at charges of round 4 to six%, whereas reserves stay cryptographically verifiable.

Perera defined that this evolution transforms Bitcoin from a unstable buying and selling instrument to a purposeful monetary infrastructure that may assist lending and leveraged portfolios.

He claimed:

‘This isn’t ‘adoption’. It’s a financial structure that rewrites itself in actual time: decentralized shortage, reprogramming of centralized liquidity.”

Moreover, Wes Grey, the founding father of Alpha Architect, urged that the whales might have taken these actions to guard themselves from attackers. He mentioned:

“[It is] additionally enjoyable to keep away from the loopy man with a gun who involves your own home and calls for you switch 10 BTC or it is recreation over.

Notably, the crypto trade has seen a rise in wrench assaults concentrating on crypto holders after BTC rose to a brand new all-time excessive this yr.

What affect will this have on Bitcoin?

Analysts at Bitfinex report this CryptoSlate that the rising wave of in-kind ETF creations is impartial to bullish within the brief time period, however structurally bullish in the long run.

They defined that this pattern lays the inspiration for a monetary system during which Bitcoin’s decentralized shortage helps centralized liquidity.

Taking this under consideration, they predicted that BlackRock’s iShares Bitcoin Belief (Ibit) might see its property beneath administration (AUM) rise from $86.8 billion to over $100 billion in November, as tax-deferred conversions proceed to soak up self-managed cash into regulated funds.

Whereas these swaps don’t create new shopping for strain, they mechanically develop the ETF AUM, scale back circulating provide by means of chilly storage, and strengthen Bitcoin’s function as institutional-grade collateral.

Bitfinex added that ETF holdings might develop one other 10-15% within the fourth quarter even with out important web inflows.

They famous that this dynamic might create a mechanical provide disaster, because the 12 BTC ETFs now personal roughly 1.35 million cash (or 6.8% of Bitcoin’s circulating provide). With fewer cash out there on exchanges, the marginal inflows might have an outsized affect on value formation.

Mixed with continued financial easing by the Federal Reserve (coverage charges at present between 4.00% and 4.25%), this contraction in out there provide might strengthen upside momentum, doubtlessly pushing Bitcoin’s value from round $108,000 in the present day to round $140,000 by mid-2026.