How Bitcoin climbs to $140k next as ETF conversions drain BTC supply
Some of Bitcoin’s greatest holders, popularly identified as whales, are quietly transferring billions of {dollars}’ value of cash into spot exchange-traded funds (ETFs).
On Oct. 21, Bloomberg reported that these whales executed roughly $3 billion in in-kind transfers by means of BlackRock’s iShares Bitcoin Trust (IBIT). Instead of promoting, they handed their Bitcoin to the ETF in trade for fund shares, a course of identified as customized creation.
Notably, this migration was made potential by a July 2025 SEC policy change approving in-kind creations and redemptions for crypto ETFs. The rule lets approved contributors ship the underlying Bitcoin moderately than money, aligning digital-asset funds with commodity ETF practices used for gold or oil.
Meanwhile, this transfer presents a structural shift that might redefine how the flagship digital asset features inside international markets.
Bloomberg ETF analyst Eric Balchunas described it as a turning level, noting that even long-time crypto purists acknowledge conventional finance’s benefits.
He mentioned:
“Tradfi (ETFs particularly) is extra badass than crypto thinks.”
Why are Bitcoin whales turning to ETFs?
Nicolai Søndergaard, a analysis analyst at Nansen, informed CryptoSlate that the ETF creations enable whales to defer taxes by swapping Bitcoin for fund shares.
According to him, this helps these cohorts to protect their BTC publicity with out promoting. He additionally famous that the actions are “bullish as a result of it removes Bitcoin from circulation.”
However, he identified that the “draw back just isn’t having the ability to commerce 24/7 and having to stick to regular buying and selling hours, however it’s probably that these whales aren’t energetic merchants anyway.”
Meanwhile, analysts at Bitunix informed CryptoSlate that Bitcoin whales have interaction in these portfolio trades as a result of the transfer transforms their decentralized wealth into belongings acknowledged by conventional finance.
According to them:
“This marks a deeper section of institutional integration for crypto markets. Bitcoin is evolving from an anti-establishment image right into a regulated asset class, redefining its capital effectivity and legitimacy.
For institutional gamers, the ETF construction allows leverage, compliance, and formal inclusion inside multi-asset portfolios—making Bitcoin a viable liquidity part alongside bonds and equities.”
However, they cautioned that this evolution comes with a trade-off. As extra Bitcoin turns into locked inside ETFs, the market may break up into two distinct layers, “regulated Bitcoin,” functioning as a financialized, collateral-bearing asset, and “on-chain Bitcoin,” sustaining its decentralized, autonomous roots.
Crypto analyst Shanak Anslem Perera echoed this view whereas arguing that the ETF-held Bitcoin can now be handled as marginable collateral, repo-eligible, and borrowable at charges round 4–6%, all whereas reserves stay cryptographically verifiable.
Perera defined that this evolution transforms Bitcoin from a risky buying and selling instrument right into a useful monetary infrastructure able to supporting lending and leveraged portfolios.
He claimed:
“This isn’t ‘adoption.’ It’s financial structure rewriting itself in actual time: decentralized shortage reprogramming centralized liquidity.”
In addition, Wes Gray, the founding father of Alpha Architect, prompt the whales may need taken these actions to shield themselves from attackers. He mentioned:
“[It is] additionally good to keep away from the wacko dude with a gun who exhibits up to your home and calls for that u switch 10 btc or it’s sport over.”
Notably, the crypto trade has seen an uptick in wrench attacks focusing on crypto holders following BTC’s rise to a brand new all-time high this 12 months.
How will this influence Bitcoin?
Analysts at Bitfinex informed CryptoSlate that the rising wave of in-kind ETF creations is impartial to bullish within the quick time period however structurally bullish over the long term.
They defined that this development lays the muse for a monetary system the place Bitcoin’s decentralized shortage underpins centralized liquidity.
Considering this, they projected that BlackRock’s iShares Bitcoin Trust (IBIT) may see its belongings underneath administration (AUM) rise from $86.8 billion to over $100 billion by November, as tax-deferred conversions proceed to take up cash from self-custody into regulated funds.
While these swaps don’t create new shopping for strain, they develop ETF AUM mechanically, tighten the circulating supply by means of cold-storage custody, and solidify Bitcoin’s position as institutional-grade collateral.
Bitfinex added that the ETF holdings may develop by one other 10–15% in This autumn, even with out important internet inflows.
They famous that this dynamic might set off a mechanical supply squeeze as the 12 BTC ETFs now maintain roughly 1.35 million cash (or 6.8% of Bitcoin’s circulating supply). With fewer cash obtainable on exchanges, the marginal inflows may have an outsized influence on value discovery.
Coupled with the Federal Reserve’s ongoing financial easing (coverage charges at the moment between 4.00% and 4.25%), this contraction in obtainable supply may amplify upside momentum, probably driving Bitcoin’s value from round $108,000 at present to roughly $140,000 by mid-2026.
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