Bitcoin’s (CRYPTO: BTC) tame reaction to a $100 million cold storage hack has prompted market observers to argue that institutional adoption, ETFs and changing custody habits have made it less sensitive to industry-specific shocks.

“All the sellers have left“

In an interview with Scott Melker on Aug. 4, Bitwise executives Matt Hougan and Ryan Rasmussen, alongside Arch Public CEO Tilman Holloway, discussed Bitcoin’s stability despite uncertainty in broader markets.

“Most new entrants to Bitcoin are getting exposure through the ETFs or through a centralized exchange,” Rasmussen said, arguing that a smaller percentage of the market is directly affected by self-custody failures than in previous cycles.

Hougan described the price reaction as another sign that Bitcoin may be nearing the end of its bear market cycle.

“We’re in this unique part of the market cycle where bad news isn’t affecting Bitcoin at all,” Hougan said.

He pointed to several recent events that failed to trigger sustained selling, including Strategy Inc. (NASDAQ:MSTR) selling Bitcoin, weakness in artificial intelligence stocks and the cold-storage incident.

"All the sellers have left,” Hougan said. “Everyone else is sort of ride-or-die Bitcoin, and you’re not shaking it out of their hands.”

Hougan said Bitwise uses qualified custodians, segregated wallets, insurance coverage, approved counterparties and several layers of transaction verification to safeguard client assets.

Institutional Adoption Continues

Hougan said institutional investors and financial advisers are viewing Bitcoin’s current pullback differently from crypto-native traders.

While sentiment on social media remains deeply bearish, he said wealth managers at firms such as Morgan Stanley, Wells Fargo, UBS and Merrill Lynch continue to prepare for longer-term crypto adoption.

"They started reorienting around Bitcoin two years ago, and they move in decade-long cycles," Hougan said.

Rasmussen added that large financial institutions are increasingly recommending small Bitcoin allocations, ranging from almost 1% to as much as 6% or 7% in some portfolios.

Hougan said advisors typically frame Bitcoin through two arguments: portfolio diversification and exposure to the migration of financial markets onto blockchain infrastructure.

He added that avoiding crypto entirely is increasingly becoming an active investment decision rather than the default position.

“For a while, crypto was outside of consideration,” Hougan said. "Now it’s part of the capital stack, and that means the default is a couple percent.”

The executives argued that the reported security incident may ultimately accelerate the shift toward ETFs, regulated custodians and institutionally managed crypto products rather than weaken demand for Bitcoin itself.

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