Bitcoin Magazine

Bitcoin Exchange-Traded Funds See Spike In Inflows Following Huge Hack

American Bitcoin exchange-traded funds have had their biggest weekly inflow since April, taking in $850 million last week, according to Bloomberg figures. 

The major U.S. funds managed by BlackRock, Fidelity, Grayscale, Morgan Stanley and others have received the cash the week after hackers targeted Coinkite’s popular Coldcard product.

Hackers started stealing millions in Bitcoin from Coldcard wallets after discovering a vulnerability in the product’s software. Some estimates put the amount of Bitcoin lost now at over $130 million. 

The incident has rattled the BTC community that typically praises cold storage solutions. 

Speaking on Bloomberg’s ETF IQ show on Monday, Robert Mitchnick, global head of digital assets at BlackRock, said that since the ETFs’ approval in 2024, investors have wanted a “very simple turnkey trusted vehicle and not have to worry about all the unique elements of Bitcoin and crypto security that generally custody otherwise would require of an investor.”

Speaking about the Coldcard hack, he added: “What’s also important to recognize is that that is not a breach of Bitcoin or any other crypto protocol — those are individual security mismanagement issues that happen from various individuals or providers.”

It isn’t clear whether investors are rotating out of cold storage into the ETFs since the hack but the funds have seen a spike in trading action. 

Bitcoin’s price has typically done well when investors have thrown cash at the products but the leading cryptocurrency is now flat over a seven-day period, priced at $63,861. 

BlackRock’s iShares Bitcoin Trust took most of last week’s inflows but other funds managed by Morgan Stanley and Fidelity also experienced trading action. 

The U.S. Securities and Exchange Commission in 2024 approved the slew of Bitcoin investment funds which went on to have the most successful launch in the history of ETFs. 

Investors previously put off from buying Bitcoin due to the complexities of cold storage and private keys can now buy shares that trade on stock exchanges that track the price of Bitcoin. 

The ETFs — managed by other top Wall Street fund managers — currently manage nearly $80 billion in assets, according to Coinglass data. 

This post Bitcoin Exchange-Traded Funds See Spike In Inflows Following Huge Hack first appeared on Bitcoin Magazine and is written by Mathew Di Salvo.

Source: BitcoinMagazine