BlackRock Just Cut the IBIT Bitcoin Barrier by 96% as ETF Flows Reverse

Key Insights:

• BlackRock cuts IBIT’s in-kind conversion minimum from $25M to $1M.
• Bitcoin ETFs record $144.6M in outflows after five sessions of inflows.
• BlackRock says IBIT investors remain focused on long-term Bitcoin exposure.

BlackRock has lowered the minimum Bitcoin amount required for in-kind conversions into its iShares Bitcoin Trust (IBIT). The minimum has fallen from $25 million to $1 million, marking a 96% reduction in the threshold.

BlackRock Head of Digital Assets Robert Mitchnick said the change gives investors with $1 million in Bitcoin access to the conversion process through authorized participants. The move comes as Bitcoin ETFs face additional withdrawals following five consecutive sessions of net inflows earlier in August.

BlackRock Lowers IBIT Conversion Minimum to $1 Million

The reduced level applies to in-kind creations and redemptions involving IBIT. Investors cannot transact directly with BlackRock, as authorized participants continue to act as intermediaries.

Mitchnick said in-kind activity remains a minority of overall Bitcoin ETF activity. However, he noted that usage has surged since regulators allowed the mechanism.

Most Bitcoin ETF inflows still come through new dollars rather than Bitcoin contributions. BlackRock has therefore been working to reduce the minimum required for in-kind transactions.

Mitchnick also discussed security concerns following the recent Coldcard wallet hack. He described the incident as a security failure rather than a problem involving Bitcoin’s underlying network.

He attributed the vulnerability to an amateurish error and described incidents involving individual wallets as security mismanagement issues.

Bitcoin ETFs See $144.6 Million in Outflows

The latest Bitcoin ETF flows show a reversal after several sessions of positive demand. U.S. spot Bitcoin ETFs recorded combined net outflows of $144.6 million on August 10, according to Farside data. BlackRock’s IBIT recorded a $53.6 million outflow, while Fidelity’s FBTC saw $40.3 million withdrawn.

Bitwise’s BITB recorded a $28.4 million outflow during the session. Grayscale’s GBTC also recorded a reported $52 million withdrawal. The August 10 decline followed net inflows of $170.1 million on August 3 and $211.5 million on August 4.

Bitcoin ETFs then recorded $244.4 million in net inflows on August 5. Inflows reached $137.6 million on August 6 and $101.7 million on August 7. The latest withdrawal, therefore, ended five consecutive trading sessions with positive flows.

The data shows approximately $52.098 billion in cumulative net inflows across the listed Bitcoin ETFs. BlackRock recorded $61.121 billion in cumulative inflows, while Fidelity reached $10.005 billion. Grayscale’s GBTC recorded cumulative net outflows of $27.513 billion.

BlackRock Says ETF Investors Remain Focused

Following the ETF outflow, Mitchnick said BlackRock has not seen signs of mass panic among its ETF investors. He described the investor base as more focused on long-term holding despite Bitcoin’s decline from its October all-time high.

He also noted that Bitcoin has experienced five major boom-and-bust cycles. According to Mitchnick, each cycle ended at a higher level than the previous one.

In addition to this sentiment, BlackRock also launched BITA, a Bitcoin premium-income ETF targeting a mid-to-high-teens yield. The product targets investors willing to accept reduced Bitcoin upside in exchange for the targeted income. Mitchnick said BITA has started well but expects slower growth than IBIT.

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