Bitcoin: Large BTC Holders Increasingly Prefer ETFs to Self-Custody

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https://cryptoast.fr/bitcoin-gros-detenteurs-btc-preferent-etf-conservation/

From a historical and above all ideological point of view, Bitcoin is accompanied by a strong principle of self-preservation of private keys by their owners, in order to ensure independence from third party entities and to maintain the assurance of not having their funds stolen.

A reality which is however starting to run out of steam, if we are to believe the recent revelations from the world leader in asset management BlackRock reported by the media Barron's. Indeed, it seems that more and more large holders of BTC are turning to ETFs in order to keep their funds in an environment considered more secure.

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How can we explain this new trend, already estimated by BlackRock at several billion dollars? Quite simply due to the very significant lowering of the minimum amount necessary to convert bitcoins held directly into shares of its IBIT ETF, from $25 million to around $1 million in BTC.

An in-kind conversion option - which therefore does not involve any resale of BTC - also offered by its main competitors Fidelity and Grayscale, which is visibly based on security fears associated with the self-preservation of Bitcoin.

Indeed, BlackRock notes several main reasons, identified as security, for this notable change in strategy on the part of large Bitcoin holders, now more reassured to entrust their BTC to Wall Street giants than to keep them themselves.

The first concerns risks that could be described as technical, involving for example the recent compromises of hardware wallets which are nevertheless considered the safest way to keep one's funds, but also repeated hacking or the loss of private keys. Not to mention the unprecedented increase in very real attacks targeting cryptocurrency holders and their families in order to steal their cryptocurrencies.

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Then come more practical reasons, such as asset management which is much simpler to optimize when the BTC held is found in the form of shares of an ETF, in particular for a private bank or a traditional financial advisor. Same observation for inheritances, which therefore involve the simple transmission of financial securities, and no longer the transfer of private keys.

Machine-translated from French