Bitcoin is becoming centralized in ETFs, making the cost of hacking rise

[AVE5]

Bitcoin is becoming increasingly concentrated in ETFs, making the risk of custodians being hacked more and more serious. There aren't many of them: Coinbase Custody, Fidelity... A hacker could make a lot of money.
Perhaps that's why laws are being considered in the US, which, if I understand correctly, will further break up the custodian monopoly?
And lead to greater deconcentration of Bitcoin in the ETF space.

From the best I can understand what emphasis, anyone investing in the Etf and expecting to observe self custodial is a lost one and there's no two ways about it that as much the funds management structure is centralized and investor's aren't in control of their own assets but the exchange having user's private keys, there certainly lies the risk of hacker's targeting to hack the exchange while holds user's private keys.
However, this hasn't mean the threats of the custodian has effect to the bitcoin network because it doesn't designate any entity to control the network.
So there's absolutely no way the Etf can centralize the bitcoin decentralized system.
And to avoid hacking of your privacies and funds, it's best advice you hold your coins yourself in the non custodial wallet.
Hardware wallets that stores your private keys online will give you and edge to keep safe from hackers too.

[EarnOnVictor]

Bitcoin is becoming increasingly concentrated in ETFs, making the risk of custodians being hacked more and more serious. There aren't many of them: Coinbase Custody, Fidelity... A hacker could make a lot of money.

We should not create unnecessary panic, as there don't seem to be too many options/alternatives yet, so what do we do? TBH, too many is being committed to Coinbase's custody, which is not good at all, and if it's not the fact that Bitcoin is decentralised itself, they would have almost certainly monopolised it; over 80% of US BTC&ETH is with them, which is too high. Still, their storage facilities have not been successfully hacked before, so let's hope it remains so.

Perhaps that's why laws are being considered in the US, which, if I understand correctly, will further break up the custodian monopoly?

Don't be happy yet, as this could be where the major loopholes starts. With Coinbase, no such successful hacking, but if the financial advisers and funds starts, that's when you hear multiples of successful hacking yearly.

[#CapsLOck]

The greater danger might not be hacking into the cold storage system itself, it might actually be the "trust in a few custodians. Withdrawal controls and safeguarding of the private keys could still cause major issues, even if those private keys are protected. ETF investors also rely on the intermediaries instead of owning the keys. Bitcoin's network is not centralized, but this does bring in an additional layer of risk. While institutional custody can be a safe place, diversifying custodians and after-the-fact security audits still are relevant.

[Hamza2424]

Bitcoin is becoming increasingly concentrated in ETFs, making the risk of custodians being hacked more and more serious. There aren't many of them: Coinbase Custody, Fidelity... A hacker could make a lot of money.
Perhaps that's why laws are being considered in the US, which, if I understand correctly, will further break up the custodian monopoly?
And lead to greater deconcentration of Bitcoin in the ETF space.

Bro, 6.9% in ETFs is nothing compared to the 66% held by individuals. And it's true that the risk is real, but bro, it's more of a custody risk, not a BTC risk. For example, if Coinbase's custody gets hacked, the protocol itself will remain safe. Those who hold their coins and keys are not going to lose them, but the price can feel the impact of sudden selling or the news of selling pressure because hacked BTC can't be sold that fast unless the hackers have OTC dealers in place to smuggle all that money in no time.

Also, I won't care about the growth of ETF holdings because they can never hold more than individuals. And even if they do, that won't change anything in the protocol or from the miners' side. Although their combined buying and selling can impact the price, we can use that in our favor.