U.S. Bitcoin exchange-traded funds attracted their largest weekly inflows since April, pulling in $850 million last week, according to Bloomberg data.

The surge in inflows comes in the wake of a security breach affecting Coinkite's Coldcard hardware wallet product. Coldcard is one of the most widely used Bitcoin-only hardware wallets, marketed specifically for its air-gapped security design. Hackers exploited a vulnerability in the device's software, enabling the theft of Bitcoin from Coldcard wallets. Current estimates place total losses at over $130 million.

Major U.S. fund managers including BlackRock, Fidelity, Grayscale, and Morgan Stanley oversee the funds that received the bulk of last week's capital. BlackRock's iShares Bitcoin Trust captured the majority of the inflows, while funds managed by Morgan Stanley and Fidelity also saw elevated trading activity.

JUST IN: BlackRock tells Bloomberg they've "seen consistently" that Bitcoin ETF investors are buying and holding BTC "long term" on this dip "That is being exhibited through this downturn." HODL pic.twitter.com/9D0j9uLJwu — Bitcoin Magazine (@BitcoinMagazine) August 10, 2026

The incident has unsettled segments of the Bitcoin community that have traditionally championed cold storage as a self-custody best practice. For years, hardware wallets have been promoted as the gold standard for eliminating counterparty risk — the very risk that Bitcoin's pseudonymous creator Satoshi Nakamoto sought to sidestep by removing third parties from financial transactions. The breach has reignited debate over whether even dedicated self-custody tools carry underappreciated risks relative to institutional custody solutions.

Robert Mitchnick, global head of digital assets at BlackRock, addressed the situation on Bloomberg's ETF IQ program on Monday. Since the ETFs' approval in 2024, he said, investors have sought 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."

Regarding the Coldcard breach specifically, Mitchnick 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."

Whether investors are systematically rotating out of cold storage into ETFs following the hack remains unclear, but the funds have unquestionably experienced a spike in trading volume.

Historically, Bitcoin's price has tended to respond positively when capital flows into the ETF products. Over the past seven-day period, however, the leading cryptocurrency has remained relatively flat, trading at $63,861.

The U.S. Securities and Exchange Commission approved the suite of Bitcoin investment funds in 2024 after a decade of rejections and regulatory deliberation. The products went on to record the most successful ETF launch in history. Investors who were previously deterred from purchasing Bitcoin due to the complexities of managing private keys and cold storage can now buy exchange-listed shares that track the cryptocurrency's price.

The funds — managed by leading Wall Street asset managers — currently hold nearly $80 billion in combined assets, according to Coinglass data.