BlackRock holds approximately 745,000 BTC with the spot ETF: surpasses the reserves of major exchanges and shifts custody towards institutional custodians

As of August 28, 2023, the iShares Bitcoin Trust (IBIT) by BlackRock holds approximately 745,000 BTC, while the iShares Ethereum ETF records positions around 3.6 million ETH according to aggregated data and industry reports, confirming a structural shift in custody from exchanges to regulated products and professional custodians.

These numbers have been verified by comparing the official documents of the issuers and on‑chain dashboards: iShares (BlackRock) – IBIT and market analyses published by specialized outlets. It should be noted that the dynamic has been gradual, but now quite clear.

According to data collected by market analysts and the on-chain dashboards I regularly monitor, the migration towards listed vehicles has increased steadily over the past two years.

The analysts on the team track deposit/withdrawal patterns over 30/90/365-day windows and observe that the decrease in on-exchange reserves is consistent with persistent net inflows towards ETFs.

The Numbers in Perspective: Share of Supply and Comparison with Exchanges

Contextualized, these volumes become significant:

• 745,000 BTC correspond to about 3.9% of the circulating supply of Bitcoin, calculating a supply of approximately 19 million (according to updated data on Blockchain.com).
• 3.6M ETH represent approximately 3% of the total supply of Ether.
• IBIT positions exceed those of the declared or estimated on-exchange reserves for some large centralized platforms, indicating the institutional preference for listed and regulated vehicles.

The data aligns with reported reconstructions and the flows indicated in market summaries, which can be consulted along with the official fund reports on ishares.com and the on-chain dashboards.

An interesting aspect is that the counts on 745,000 BTC and 3.6M ETH refer to a specific snapshot and, as always, require comparison with subsequent updates to grasp the evolution of the picture. Update: the observations and trends are confirmed until August 2025 according to the on-chain analyses and market reports consulted.

The new geography of custody: from exchange accounts to regulated custodians

The growth of spot ETFs is reshaping the asset custody landscape: fewer coins are held in exchange hot wallets and an increasing number of assets are stored in segregated custody with institutional custodians offering audits, insurance, and stringent compliance controls.

In the case of IBIT, the appointed custodian is Coinbase Custody, while other ETFs in the market rely on regulated operators – including Gemini, Fidelity, or BitGo – reinforcing the concept of consolidation of custody in a few specialized hands, thus influencing transparency, operational risk, and governance.

In this context, operational centralization increases efficiency but also introduces new points of attention. For an in-depth look at key terms, see our guide on segregated custody.

Why ETFs Drain Liquidity from Exchanges

• Compliance and reporting: listed funds offer standardized documentation and audit processes, meeting the needs of pension funds, endowments, and asset managers.
• Integration into portfolios: these regulated vehicles fit into existing mandates without the need to manage private keys or direct on-chain operations.
• Creation/redemption mechanism: when there is net demand, authorized market makers create new shares, absorbing the spot supply and thus reducing net deposits on exchanges. For a technical explanation of the process, see our guide on ETF creation/redemption.

On-chain flows and signals: ETF inflows increasing, exchange deposits decreasing

• Net inflows into Bitcoin and Ethereum ETFs are positive across various time frames, with days marked by million-dollar inflows according to specialized press data and market aggregators.
• The 30-day moving average of inflows to exchanges is at relatively low levels compared to the last year, indicating reduced selling pressure from large holders, as shown by data from Glassnode and CryptoQuant.
• The BTC and ETH reserves on exchanges continue to decline when analyzed over 90/365 day periods, consistent with the shift towards institutional custody.

That said, a further reading of the flows suggests that the figures of 745,000 BTC and 3.6M ETH are consistent with the idea of persistent institutional demand: fewer assets in exchange hot wallets, more assets in listed vehicles and in segregated custody. It should be noted that market seasonality can affect the pace of inflows, but the underlying trend remains clearly visible.

Impact on Prices and Market Depth

With a larger share of supply “frozen” in listed vehicles and a reduced availability of assets on the spot order book, the net liquidity tends to decrease.

This can amplify price movements: on one hand, supporting the value during demand phases, while on the other hand, it can accentuate volatility in case of redemptions or market shocks.

In recent weeks, despite recording high quotations, inflows to exchanges have remained limited, configuring a typical pattern of institutional accumulation. In this scenario, even small imbalances can produce more pronounced effects than expected.

Risks and Opportunities of the New Equilibrium

Opportunities

• A more stable institutional demand potentially oriented towards the long term.
• Greater transparency on holdings, audits, and risk management processes.

Risks

• The concentration of custody in a few large custodians increases the risk of the so-called single point of failure.
• The reliance on the creation/redemption mechanism can generate pro-cyclical flows during market stress phases.
• Regulatory arbitrage between jurisdictions could lead to misalignments between spot price and NAV following shocks.

What to Monitor in the Coming Months

• The market quotes between ETFs and exchanges in terms of on-chain reserves.
• Possible diversifications of custodians adopted by issuers, with multi-custodian strategies.
• The trend of net inflows over 30, 90, and 365-day horizons and their correlation with price movements.
• The initiatives and guidelines of regulators regarding custody, reporting, and market making; for regulatory updates, consult our section dedicated to regulation and guidelines.