Bitcoin ETFs post $1B weekly inflows as Coldcard hack spurs shift

Bitcoin may be near the bottom of its bear market, Bitwise's Matt Hougan said, as ETF inflows hit a four-month high.

US spot Bitcoin ETFs pulled in roughly $1 billion in net inflows last week, the strongest since April, after the Coldcard wallet hack.

"The Coldcard breach could make spot Bitcoin ETFs more appealing to some investors, including even some long-time bitcoin holders," Eric Balchunas, an analyst at Bloomberg Intelligence, said.

The inflows followed disclosure of a vulnerability in Coinkite's Coldcard hardware wallets that drained an estimated $116 million to $130 million of bitcoin, according to Bloomberg reporting. Bitcoin traded near $63,861 as of Aug. 11, down roughly 50 percent from its October record and holding in a $60,000-to-$67,000 range since June. BlackRock, Fidelity, Grayscale and Morgan Stanley funds saw the strongest demand, with the iShares Bitcoin Trust leading weekly inflows.

The demand reflects "the marginal coin is migrating from self-custody into institutional wrappers where it becomes captive, allocated supply," Rajiv Sawhney, head of international portfolio management at Wave Digital Assets, said. Whether the shift persists will hinge on sustained inflows after a week that also saw BlackRock cut the minimum for in-kind conversions into IBIT by 96 percent, to $1 million from $25 million.

Coldcard hack tests the self-custody case

Cold wallets have long been regarded as one of the safest ways to store bitcoin, kept offline and separated from the internet to reduce exposure to cyber attacks. The Coinkite incident challenged that assumption: a flaw in certain firmware versions made the information securing some wallets more predictable, letting attackers drain funds without ever touching the devices.

The episode has revived a debate over who bears custody risk. Robert Mitchnick, global head of digital assets at BlackRock, called the breach "individual security mismanagement" rather than a failure of Bitcoin's underlying network. Still, Balchunas said investors uncomfortable with key management may gravitate toward regulated wrappers, even if the link between the hack and ETF flows is not proven.

Bottom-call and the ETF pipeline

Bitwise's Hougan told Bloomberg Crypto on Aug. 11 that crypto may be at the bottom of the current winter, a call that could support further inflows if it shifts sentiment. The funds, approved by the SEC in 2024, collectively manage nearly $80 billion in assets, with IBIT holding $61.1 billion in cumulative inflows and Fidelity's FBTC at $10 billion, per Coinglass data.

The test for the market is whether last week's rebound marks a continuation or a pause. ETF inflows are driven by institutional allocation patterns and advisor workflows, and a single strong week does not confirm a structural turn. If inflows keep outperforming prior weeks, the custody-security narrative could become a durable driver of demand.

This article is for informational purposes only and does not constitute investment advice.