Massive bitcoin investors are trading the coins they protect independently for shares of BlackRock’s iShares Bitcoin Trust (IBIT) at an unprecedented rate, the company’s director of digital assets stated on Monday, as abductions and breaches place safety at the pinnacle of their concerns.
“The present level is the highest we have witnessed at any stage,” Robbie Mitchnick informed Barron’s, adding that demand for these swaps “has basically moved in a single direction — upward.” Out of all the justifications provided by clients, he mentioned, “the absolute primary one is security and peace of mind.”
These trades consist of in-kind conversions. A holder supplies bitcoin to the fund via an intermediary and obtains newly minted IBIT shares, avoiding any need to liquidate the coins for cash first. BlackRock depends on Galaxy Digital, Talos, and Virtu to manage these operations, and those institutions establish the threshold minimums.
Barron’s estimated the trading volume experienced by BlackRock at $3.6 billion, pointing out that the actual figure might be even higher because the institution does not handle every single conversion directly. Mitchnick referenced a larger metric back in August, telling Bloomberg that IBIT had processed in excess of $5 billion in such exchanges, climbing from over $3 billion in October 2025.
During that August conversation, BlackRock’s Mitchnick explicitly pointed out the dangers: “Individuals observe occurrences in the external environment — whether they involve kidnappings, extortion, or custody failures — which prompt them to execute this transition for part or all of their assets.”
He informed Barron’s that the recent Binance breach came as no surprise to major investors. “The majority of substantial Bitcoin investors were already acutely conscious of the hazards associated with keeping funds on an exchange and inside a hot wallet,” he noted.
How BlackRock’s swaps became possible
The SEC voted on July 29, 2025, to allow spot bitcoin and ether vehicles to generate and redeem shares in-kind, concluding the cash-exclusive framework it mandated when those investment vehicles debuted in January 2024.
Accessibility has broadened since then. BlackRock’s initial entry barrier hovered near $30 million and currently sits between $1 million and $2 million, according to Barron’s.
Tax implications form part of the appeal. Transforming appreciated bitcoin into IBIT via an in-kind mechanism “typically is not viewed as a disposal that would trigger capital gains liabilities,” Barron’s observed, whereas Bloomberg warned that escaping an immediate tax obligation relies entirely on an investor’s personal situation. Mitchnick also highlighted estate planning, describing it as “substantially simpler” to maintain exposure “within the parameters of their private banking relationship.”
Once deposited, the tokens reside with the custodian of IBIT, which is an affiliate of Coinbase Prime, utilizing what Mitchnick described as an “institutional-grade cold-storage framework.” The trust maintained 795,921 BTC, valued at approximately $60.4 billion, as of November 6.
Why the flow numbers overstate demand
An in-kind creation expands the supply of IBIT shares and contributes to the vehicle’s documented inflows, yet zero bitcoin is purchased on the open market. The assets already existed and merely swapped wrappers, meaning headline flow metrics exaggerate fresh capital inflows.
Capital has traveled in the opposite direction. U.S. spot bitcoin ETFs shed about $1.28 billion across the week ending November 6, marking their most difficult week since June, with IBIT representing roughly $1.21 billion of that total, according to data from Farside Investors.
Self-custody under pressure
The apprehensions fueling these transactions are well-documented. French officials have documented 77 crypto-related abductions, extortion schemes, and home invasions throughout 2026, surpassing the total for all of 2025, the OCCRP revealed, referencing the national organized crime prosecutor. Reuters shared last year that a co-founder of Ledger lost a finger following an abduction alongside his spouse.
The United States has encountered comparable incidents, including a foiled Connecticut conspiracy aiming to compel a household into surrendering their bitcoin. Bitcoin security analyst Jameson Lopp keeps a public inventory of physical assaults targeting holders stretching back to 2014, while the Coldcard vulnerability in August placed hardware wallets under intense scrutiny as well.
This migration runs counter to bitcoin’s original promise of securing wealth free from financial institutions. Investors who convert surrender their private keys in exchange for a brokerage claim, swapping the hazard of protecting coins personally for dependence on BlackRock, its custodian, and the intervening market makers.
Originally published at https://bitcoinmagazine.com/news/blackrock-bitcoin-whales-self-custody-ibit.
