You know what the harshest truth is? Majority of those who have Bitcoin don't even have the private keys with them.
That is very true, they store their funds in centralized exchanges and custodial services because they think they do not have what it takes to be their own bank. Despite all the events that has happened with exchanges, they still believe that some exchanges are too big to fail.
That's certainly one reason, but that's the better reason I guess. That's more or less an informed choice. More than those who have such reason, unfortunately, are people who lack basic awareness. I know of a number of individuals whose only knowledge is that Bitcoin rises in price, there are meme coins to invest in as well, and Binance. Hardware wallets are aliens to them. They haven't heard of Trezor or Ledger or SafePal.
If somebody chooses a custodial wallet because he/she can't handle the responsibilities associated with self-custody, that's all right. It's worse if the reason is that they trust centralized exchanges. But it's certainly much worse if the reason is that there's only Binance where you can keep your Bitcoin and shitcoins.