1Referee, I would not say that only reason why people keep their coins in desktop/mobile wallets is because of money which needs to be invested in a hardware wallet, but also because most of them are not even aware that such security solutions exist at all.
On the other side, we have ignorance with a completely wrong premise about what is cryptocurrency. As a result of that, many crypto users do not realize how challenging it is to be their own bank.
Fair points. Ignorance is a big factor indeed, which comes to show how not ready we are to onboard the average joes of this world. In that regard, it also makes sense for centralized entities such as Coinbase and Bakkt to offer custodial services, because the gap between a clueless crypto enthusiast and someone who knows how to be his own bank in a secure way is massive.
I know Bitcoiners don't like them, and that for a good reason overall, but these wouldn't exist if the demand wasn't going through the roof, hence these entities holdings billions on behalf of all sorts of holders.