Bitcoin: For fear of kidnapping, whales entrust $5 billion to BlackRock

More security, less self-custody. Large bitcoin holders have exchanged some of their holdings for shares of the iShares Bitcoin Trust (IBIT), BlackRock's spot bitcoin ETF. In August, the manager reported more than $5 billion in conversions. Robbie Mitchnick, its head of digital assets, cites kidnappings, ransom demands and custody incidents among the reasons why some investors delegate custody of their bitcoins.

The key points of this article

BlackRock already reported more than $5 billion in conversions as of August 2026.

Investors can contribute bitcoins they already hold in exchange for shares of IBIT.

The conversion threshold proposed by BlackRock increased from $25 to $1 million in July 2026.

U.S. spot Bitcoin ETFs had about $914 million in net outflows year-to-date as of November 6.

Why large Bitcoin holders are turning to BlackRock

Interviewed by the press, Robbie Mitchnick explains that some investors convert all or part of their bitcoins after seeing other holders victims of attacks or incidents related to the custody of their assets. Chainalysis recorded 46 violent attacks or attempts worldwide at the end of June 2026, compared to 40 at the same period in 2025. The count includes kidnappings, home invasions and hostage-taking.

The SEC authorized the creation and redemption of shares in kind in July 2025. The operation goes through an authorized intermediary who organizes the transfer of bitcoins to the fund in exchange for shares. The investor thus maintains exposure to the price of bitcoin, while the fund entrusts the custody of the assets to its custodians. In July 2026, BlackRock lowered the minimum amount for these conversions from $25 million to $1 million.

Conversions increase while ETF flows remain negative

An in-kind conversion transfers bitcoins already held by the investor to the fund. It can therefore increase the number of bitcoins held by IBIT without requiring a purchase on the market at the time of the transaction. The fund's quarterly report shows $15.3 billion in bitcoins received in kind during share creations over the first nine months of 2026. This figure covers all in-kind creations and therefore goes beyond the sole scope of conversions of large portfolios mentioned to Bloomberg.

Across all US spot Bitcoin ETFs, the balance of flows deteriorated at the beginning of November. According to SoSoValue data, funds saw $1.28 billion in net outflows from November 2-6, bringing the year-to-date balance to approximately −$914 million as of that date.