Key Takeaways:
BlackRock's iShares Bitcoin Trust processed more than $5 billion in direct Bitcoin-to-ETF conversions after lowering its minimum transaction threshold to $1 million, pulling whale-held coins into Wall Street products.
"It's going to keep growing because we keep expanding the access," Robbie Mitchnick, head of digital assets at BlackRock, said. Mitchnick cited security concerns — kidnappings, ransom demands, custody failures — as reasons large holders are moving coins into regulated vehicles.
The total climbed from more than $3 billion in October 2025, when Bloomberg first reported the trend. BlackRock cut the minimum in-kind conversion size from $25 million to $1 million in July, after the SEC authorized in-kind transactions for crypto exchange-traded products. Bitwise followed by reducing its own minimum from $100 million to $3 million. IBIT held more than $60 billion in net assets as of Aug. 25. Bitcoin traded near $79,000 Wednesday after briefly touching a three-month high above $81,000.
The conversion mechanism lets eligible holders exchange BTC for ETF shares without selling for cash, potentially deferring capital gains depending on jurisdiction. Bitcoin needs a roughly 27 percent gain to reclaim $100,000, a level analysts have flagged as achievable if fourth-quarter historical patterns hold.
Bloomberg ETF analyst Eric Balchunas said GLD and IBIT returned to the 10 most-traded US ETFs on Monday, ranking third and seventh by value traded at $4.02 billion and $2.24 billion respectively. The move pushed semiconductor funds like SOXL, SOXX, and SMH down the list. Balchunas called it "yet another sign the debasement trade is beginning to replace AI mania."
The rotation extends beyond equities. BlackRock's Ethereum ETF, ETHA, recorded $131.94 million in session inflows, while Solana climbed above $100 as weekly non-vote transactions reached a record 1.318 billion, according to TokenPost data.
Motley Fool analyst Dominic Basulto pointed to Bitcoin's historical fourth-quarter performance — an average 77 percent return since 2013 — as one path back above $100,000. However, Bitcoin fell 23 percent in Q4 2025, one of its weakest year-end performances on record. Ran Neuner of Crypto Banter said the rally that began as a short squeeze has developed into a healthier advance, citing Bitcoin's move above its 200-day moving average and a bullish MACD crossover. Neuner noted that after weekly candles of at least 20 percent, Bitcoin has historically risen an average of 3.5 percent after one day, 8.3 percent after seven days, and 36.5 percent after eight weeks.
Longtime crypto investor Arthur Hayes has argued that a bursting AI bubble could redirect capital toward Bitcoin, a thesis that aligns with Balchunas' observation about the debasement trade. Treasury Secretary Scott Bessent's discussion of using the Treasury General Account to support long-dated bond buybacks could add liquidity and pressure the dollar, which Neuner said would help both Bitcoin and gold.
Meanwhile, mixed US economic data added short-term pressure to crypto markets. Annual core PCE inflation matched expectations at 3.3 percent, but headline PCE reached 3.7 percent, slightly above the 3.6 percent forecast. Second-quarter GDP remained at 1.5 percent, while the GDP deflator rose to 6.4 percent. Persistent inflation could restrain near-term crypto buying ahead of Federal Reserve Chair Kevin Warsh's Friday speech.
This article is for informational purposes only and does not constitute investment advice.
