Coldcard Hack Spurs $626M Influx Into US Bitcoin ETFs
A massive $130 million Coldcard hardware wallet hack has led to a surge in investors moving their Bitcoin into U.S. spot exchange-traded funds (ETFs). Between August 5th and 6th, a total of $626 million flowed into ETFs managed by top Wall Street fund managers such as BlackRock, Fidelity, Grayscale, Morgan Stanley, and others.
The hack exploited a firmware flaw in the popular Coldcard wallets that allowed attackers to guess weak private keys. Since then, millions of dollars in Bitcoin have been drained daily, prompting cautious investors to move their coins to other storage solutions, including exchanges.
Eric Balchunas, senior ETF analyst at Bloomberg Intelligence, weighed in on the situation, suggesting that investing in a major financial institution's custody solution is preferable to relying on smaller companies like Coinkite, Coldcard's parent company. 'Who are you gonna trust to not screw up the security of your Bitcoin (or get it back if some scumbag does mess with it): a 5-man boutique in Canada or this guy and his 25,000-employee, $15T by-the-book empire?' Balchunas tweeted.
BlackRock's iShares Bitcoin Trust (IBIT) has received the lion's share of new investment from ETF investors, managing over $77.8 billion in assets combined across all ETFs. This influx of cash indicates a market rotation towards institutional custody and product adoption in crypto despite elevated security risks.