Bitcoin ETF Inflows Rise as Coldcard Hack Fuels Custody Debate

U.S. spot Bitcoin exchange-traded funds recorded about $620 million in inflows following the Coldcard hardware-wallet exploit, according to Bloomberg Senior ETF Analyst Eric Balchunas.

Balchunas highlighted the timing on X while suggesting that the two developments could be connected.

However, there is no evidence establishing that Coldcard users directly caused the ETF inflows. The figure represents flows during the period following the exploit rather than identified transfers from affected wallet holders.

Balchunas had previously argued that the security incident could encourage some Bitcoin investors to reconsider self-custody.

Crypto entrepreneur Nic Carter also supported the possibility of some users shifting toward institutional custody.

However, strong Ethereum ETF inflows during the same period suggest broader institutional demand may also have contributed to the trend.

Balchunas Links Bitcoin ETF Demand to Coldcard Hack

Balchunas noted that the shift towards a Bitcoin ETF rather than self-custody will be driven mostly by security concerns. According to him, TradFi institutions running crypto ETFs are major businesses that inspire more customer trust than cold wallet developers do.

“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?” he wrote.

Meanwhile, the ETF expert also defended Crypto ETFs, noting that they do not contradict Bitcoin’s anti-establishment ethos.

Balchunas described ETFs as lean and mean, distinct from Wall Street, yet still part of the traditional financial system. In his opinion, using a Bitcoin ETF does not amount to selling out.

However, he acknowledged that Crypto ETFs only work for basic long-term investing. According to him, a Bitcoin ETF will not help those using BTC to bypass censorship or for transactions, which he believes are also important.

Coldcard Hackers Commence Laundering of Stolen Funds

While there is no data yet to back Balchunas’ theory, some of the hackers in the Coldcard incident appear to have started laundering stolen funds. According to TRM Labs, 64.9 BTC and 200 ETH have been deposited into crypto mixers Wasabi and Tornado Cash, respectively.

This is only a small fraction of the estimated 1,816 BTC worth around $116 million that have been reported stolen from 5,200 addresses. While the exact amount stolen remains unknown, it is already the third-largest hack in 2026.

So far, TRM Labs’ analysis indicates that most of the funds are being consolidated, suggesting the hackers are still considering how to move them. They noted that this is unlike professional hacking groups, which usually start laundering funds within hours or days of stealing them.

Interestingly, the blockchain security firm also said the incident has further confirmed that self-custody only relocates risks and does not remove them totally.

This article is provided for informational purposes only and does not constitute financial or investment advice. Cryptocurrency markets are highly volatile. Readers should conduct independent research and consult a licensed financial advisor before making investment decisions.