ETF Inflows Surge Amid Coldcard Hack, Raising Questions About Self-Custody Risks

The recent Coldcard wallet hack has sparked a surge in demand for US spot Bitcoin exchange-traded funds (ETFs), with several daily inflows coinciding with the incident. According to Bloomberg senior ETF analyst Eric Balchunas, BlackRock's iShares Bitcoin Trust (IBIT) and Fidelity Wise Origin Bitcoin Fund (FBTC) recorded $620 million in inflows over the past week. This figure is consistent with Cointelegraph's recent reporting on the ETF inflow streak.

The Coldcard exploit drained more than $116 million worth of Bitcoin from over 5,200 wallet addresses, according to blockchain intelligence firm TRM Labs. Balchunas noted that while there may be a connection between the hack and the increased demand for ETFs, it is unclear at this time. 'I'm not saying it's connected, we just don't know,' he said.

The debate over self-custody risks has been reignited by the Coldcard hack, with some arguing that storing crypto on centralized exchanges may be safer than self-custody. Binance co-founder Changpeng 'CZ' Zhao weighed in on the debate, citing data from analyst Willy Woo that cumulative Bitcoin losses from self-custody incidents have surpassed those from exchange hacks.