Demand from large bitcoin holders to convert bitcoin they have stored directly into shares of BlackRock's spot bitcoin exchange-traded fund (ETF), IBIT, has reached a record high.

Bitcoin Magazine reported on Nov. 9 that Robbie Mitchnick, BlackRock's head of digital assets, said demand to swap bitcoin into IBIT shares is higher than ever.

The conversion is carried out in kind, swapping bitcoin for ETF shares without selling bitcoin for cash. A holder delivers bitcoin to the fund through a broker and receives newly issued IBIT shares in return. Galaxy Digital, Talos and Virtu handle the trades, and each broker sets the minimum trade size.

The scale of conversions has also grown. Barron's tallied the amount confirmed by BlackRock at $3.6 billion, but said the actual total could be larger because BlackRock does not handle every conversion directly. Mitchnick previously said in an August Bloomberg interview that IBIT conversions had exceeded $5 billion.

Security concerns about storing bitcoin are behind the demand for conversions. Mitchnick said that in relation to a recent Binance hack, large holders already fully recognised the risks of keeping assets on exchanges and in hot wallets.

Regulatory changes also supported the shift. The U.S. Securities and Exchange Commission (SEC) on July 29, 2025 allowed in-kind creation and redemption for bitcoin and ether ETFs. That changed the cash-only structure applied when spot bitcoin ETFs launched in January 2024. The minimum conversion amount has also fallen from about $30 million initially to around $1 million to $2 million recently, lowering the barrier to access.

Tax and estate-transfer convenience is also cited as an incentive. Barron's said that swapping bitcoin that has risen in price into IBIT shares through an in-kind transaction is generally not regarded as a sale that triggers capital gains tax. Whether taxes are actually imposed can vary depending on an investor's circumstances.

Care is needed in interpreting in-kind conversions as new buying inflows. When IBIT shares are issued through in-kind conversion, it is counted as an ETF inflow, but it does not involve newly buying bitcoin in the market.

The broader ETF market has instead seen net outflows recently. Spot bitcoin ETFs recorded about $1.28 billion of net outflows in the week ended Nov. 6. That was the largest weekly net outflow since June, with about $1.21 billion leaving IBIT alone. It means funds can still leave the overall ETF market even as demand for in-kind conversions rises.

The trend shows a shift in how bitcoin holders choose to store their assets. More holders are opting to entrust custody to asset managers and custodians through ETFs rather than managing private keys themselves. Holders who had prioritised direct control are turning to indirect holdings through financial institutions in consideration of security and inheritance convenience.