According to information reported by Bloomberg, BlackRock significantly reduced the threshold for direct conversions into its Nasdaq-listed spot Bitcoin ETF, IBIT, in July. Under this mechanism, investors can transfer Bitcoin directly to the fund and receive ETF shares in return, eliminating the need to sell their Bitcoin first and subsequently purchase ETF shares.
Bitwise has taken a similar step, lowering the minimum amount required to transfer Bitcoin directly into its ETF from $100 million to $3 million. Direct conversions involving BlackRock’s IBIT have now surpassed $5 billion, while company executives have pointed to custody and security concerns as factors encouraging some large holders to move part or all of their Bitcoin exposure into ETFs.
These transactions do not represent new capital flowing into Bitcoin ETFs, as they involve converting Bitcoin already held by investors into fund shares. Similar mechanisms have also expanded to Ether ETFs, with firms including Grayscale and VanEck allowing eligible investors to obtain ETF shares without first selling their underlying crypto assets.
