Bitcoin holds $64,000 as $100M Coldcard hack fails to trigger selling

Bitcoin's muted reaction to a $100 million Coldcard wallet hack is being read by Bitwise executives as proof that institutional holders have stopped selling.

Bitcoin held above $64,000 on Aug. 5, barely reacting to a $100 million Coldcard wallet hack that drained 1,596 bitcoin from 7,300 wallets.

"Most new entrants to Bitcoin are getting exposure through the ETFs or through a centralized exchange," Ryan Rasmussen, an executive at Bitwise, said, arguing that a smaller share of the market is directly exposed to self-custody failures than in prior cycles.

Galaxy Research identified 1,596 bitcoin, valued at about $102 million, stolen from more than 7,300 wallets across three confirmed waves of theft and 14 smaller incidents. A firmware flaw in Coldcard devices dating to March 2021 left wallet seeds weak enough for hackers to guess, the firm found. Bitcoin touched a three-week low near $62,700 on Friday before recovering to just over $64,000.

The muted reaction suggests the market's seller base has thinned, with Bitwise's Matt Hougan telling Scott Melker on Aug. 4 that "all the sellers have left." Institutional flows through ETFs and regulated custodians now dominate, with wealth managers at Morgan Stanley, Wells Fargo, UBS and Merrill Lynch preparing for longer-term allocations of 1 percent to 7 percent.

"All the sellers have left"

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

"We're in this unique part of the market cycle where bad news isn't affecting Bitcoin at all," Hougan said. "All the sellers have left. 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.

Custody shift accelerates

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

"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. Galaxy Research said victim addresses are still being compiled, and including suspected losses, the total could reach about 2,000 bitcoin, or roughly $130 million.

This article is for informational purposes only and does not constitute investment advice.