Managing your own money (and safety) is a concept very different to what we are used to in terms of money. Where cash increasingly went out the door for plastic money and your money in the bank, safety was an issue far far away, with money on your PC, private keys and new technological mumbo jumbo told by your neighbour kid without you understanding anything of it, I fully understand that people keep their coins on their exchange. After all, isn't it some kind of online banking institution?

Second, I do not think that people are long term HODL'ers right away and perhaps are scared that the Bitcoin price may tank and want to dump at the first sign of trouble.

Perhaps the solution when cryptocurrency grows is people having a USB hardware key with which they are able to control funds in an exchange? This should be implementable with ease (technology is there).