Bitcoin ETF inflows surge after Coldcard hack, but link is unclear: Bloomberg analyst
A week-long streak of inflows into US spot Bitcoin ETFs has coincided with the Coldcard wallet exploit, fueling debate over whether some investors are shifting away from self-custody.
In recent weeks, funds have been rapidly flowing into US spot Bitcoin ETFs, with a notable surge coinciding with the Coldcard wallet hack. Analyst Eric Balchunas from Bloomberg has noted that major spot Bitcoin ETFs such as BlackRock's iShares Bitcoin Trust (IBIT), Fidelity Wise Origin Bitcoin Fund (FBTC), Bitwise Bitcoin ETF (BITB), ARK 21Shares Bitcoin ETF (ARKB), and Defiance Daily Target 2X Long MSTR ETF (MSBT) have seen daily inflows since the weekend exploit.
The cumulative amount amounts to around $620 million, consistent with recent reports by Cointelegraph.
However, the link between the Coldcard hack and the influx in ETF investments remains unclear, as emphasized by Balchunas. "I'm not saying it's connected, we just don't know," he stated on X. "Long-term, I can't imagine there aren't some who migrate over."
The Coldcard hack, which drained over $116 million worth of Bitcoin from more than 5,200 wallet addresses, has added to the discourse surrounding the risks associated with self-custody. This event has sparked debate on the trade-offs between holding Bitcoin directly and investing in regulated products like spot Bitcoin ETFs, where asset custody and security are managed by institutional entities.
Even high-profile figures like Binance co-founder Changpeng "CZ" Zhao have weighed in on the discussion. He suggested that storing crypto on centralized exchanges might be statistically safer compared to self-custody, based on data by analyst Willy Woo. Woo's findings indicate that cumulative Bitcoin losses from self-custody incidents have exceeded those from exchange hacks.
Zhao argued that cyberattacks on centralized exchanges are typically documented more frequently, while attacks on self-custody solutions are often underreported.
The debate is further complicated by the rise of AI-assisted cyberattacks, as seen when Bitcoin swap service Boltz temporarily suspended its non-custodial bridge due to an alarming rise in AI-assisted exploits. These attacks allowed hackers to identify and exploit vulnerabilities more swiftly than the service's team could patch.
Written by urgent.news from Cointelegraph's reporting — not their text. Machine-written — it may contain errors, so check the original before relying on it.
