Cold Wallet Hack Fuels Bitcoin ETF Inflows and Custody Debate
Vexoda Newsroom
US spot Bitcoin ETFs saw significant inflows following a cold wallet hack, reigniting debates on digital asset security. Analysts predict this could push more investors towards institutional custody s
In the past two days, US spot Bitcoin (BTC) exchange-traded funds (ETFs) experienced substantial inflows totaling $382 million, with Galaxy’s Bitcoin ETF leading the recovery. This influx came amidst renewed focus on digital asset security following a high-profile Coldcard hack.
According to data from SoSoValue, Galaxy's Bitcoin ETF recorded net inflows of $170 million and $6.7 million respectively on Monday and Tuesday, marking its first positive daily flow since July 1st. BlackRock’s iShares Bitcoin Trust (IBIT) also saw significant gains with over $281 million in combined inflows.
The Coldcard hack involved an estimated 7,300 addresses and potential losses of about $130 million worth of BTC. Galaxy Research highlighted these numbers, emphasizing the risks associated with self-custody compared to institutional solutions. This incident has sparked a broader debate on whether investors might prefer ETFs for their perceived safer custody options.
Eric Balchunas, senior ETF analyst at Bloomberg Intelligence, argued that this hack could encourage greater migration towards Bitcoin ETFs as they offer traditional financial institution-backed security measures. He noted that what was once considered a “bug” by some crypto users may now be seen as an advantage in comparison to smaller crypto companies.
Despite these inflows and heightened custody concerns, the price of BTC remained relatively stable at $64,113 over the past week. Traders weighed the Coldcard incident against other selling pressures like a significant 1,638 BTC sale by Michael Saylor’s Strategy.
The renewed focus on institutional custody could have broader implications for the ETF market, as seen in recent closures and planned changes such as Hashdex's spot Bitcoin ETF closure and BlackRock’s Ethereum ETF reverse split. This shift may attract more investors seeking secure storage solutions within regulated financial products.
Traders should continue to monitor developments surrounding the Coldcard hack and its impact on institutional custody preferences. Additionally, they must stay informed about regulatory updates affecting crypto-related securities.
Source: Cointelegraph. Summarized and rewritten by the Vexoda Newsroom. This is market news, not financial advice.