BlackRock’s in-kind ETF creation mechanism has absorbed over $3 billion in Bitcoin from large holders seeking to avoid capital gains taxes. For the first time in roughly fifteen years, the amount of Bitcoin held in self-custody wallets has declined. These in-kind swaps allow whales to convert their coins into ETF shares without selling, thus avoiding a taxable event. Despite this migration, 65.9% of the total supply, representing 13.83 million BTC worth over $800 billion, remains in self-custody. Security breaches on hardware wallets in August 2026, causing between $116 million and $130 million in losses, have reinforced the appeal of regulated structures.
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