ETF Inflows Soar as Coldcard Hack Raises Self-Custody Concerns

A recent surge in demand for US spot Bitcoin exchange-traded funds (ETFs) has some analysts wondering if investors are reconsidering self-custody after a high-profile hack of the Coldcard wallet.

The BlackRock iShares Bitcoin Trust, Fidelity Wise Origin Bitcoin Fund, Bitwise Bitcoin ETF, ARK 21Shares Bitcoin ETF, and Defiance Daily Target 2X Long MSTR ETF have all seen daily inflows since the weekend exploit, totaling around $620 million, according to Bloomberg senior ETF analyst Eric Balchunas.

The Coldcard hack saw more than $116 million worth of Bitcoin drained from over 5,200 wallet addresses, highlighting concerns about even hardware wallet users' exposure to firmware flaws and software vulnerabilities.

Binance co-founder Changpeng 'CZ' Zhao weighed in on the debate, arguing that storing crypto on centralized exchanges may now be 'statistically safer' than self-custody, citing data from analyst Willy Woo that cumulative Bitcoin losses from self-custody incidents have surpassed those from exchange hacks.