The main event of the week in the market was not the price of Bitcoin, but security: Coldcard wallets found themselves at the center of a major attack, which resulted in more than 1,816 BTC, or about $114 million, being withdrawn from over 5,200 addresses. The problem had persisted since 2021, with attacks coming in waves starting July 30, and by the end of the reporting period, they had not yet been fully stopped.
The blow to the market was painful, but not catastrophic. The total cryptocurrency market capitalization fell from $2,201 billion to $2,188 billion, a decrease of 0.58% over seven days. Bitcoin lost 0.84%, Ethereum declined more sharply, and the only coin in the top five to finish the period in the green was BNB. The week included several strong factors at once: the largest failure in self-custody, a BTC sale by a major corporate holder, and a strong signal from the Fed, but the market never saw a sharp panic day.
The Market Stalled, Though There Was Plenty to Fear
The calm was evident not only in the charts. The Bitcoin BVIV implied volatility index fell to 36%, its lowest level since May 31. At the beginning of June, it hovered around 60%. In other words, demand for downside protection weakened sharply just as the news backdrop became noticeably more alarming.
Bitcoin traded all week in a range from $62,360 to $65,189. The Fear and Greed Index fell from 29 to 27 points and remained in the fear zone. This picture allows for two interpretations: on the one hand, the market showed resilience to bad news; on the other, volatility rarely stays at historically low levels for long.
“About 155,000 BTC moved into the cost basis range of $62,000-$65,000. This means that sales were absorbed by buyers near current levels. Such concentration equals 0.7% of circulating supply and may keep Bitcoin in the range until a stronger catalyst appears,” Bitfinex analysts noted.
There was also pressure from central banks. On July 29, the Fed left the rate in the 3.50-3.75% range for the fifth consecutive time. At the same time, three dissenters advocated not for a cut, but for a rate hike. At the press conference, Fed Chair Kevin Warsh made it clear that the regulator is not ready to soften its stance.
“There is no soft target for inflation. There is only the target, and it is 2%,” said Kevin Warsh.
The bond market responded with rising yields across the curve. Thirty-year bonds approached their highest levels since 2007, and the probability of a rate hike in September was estimated at about 57%. For cryptocurrency, this is a mixed signal: in the long term, Bitcoin’s limited supply looks like a strong argument, but in the moment, high real rates make bonds more attractive for capital.
Currencies, Stablecoins, and Liquidity
The currency market added further nervousness. On August 3, Japan and the US confirmed a rare joint intervention to support the yen—the first coordinated operation of this scale since 2011. Authorities in Japan were estimated to have spent up to $36.58 billion to buy the national currency.
“We will not hesitate and will participate in new joint interventions,” said US Treasury Secretary Scott Besant.
Crypto investors quickly recalled August 2024, when the reversal of the yen carry trade hit risk assets. There is no direct correlation here: the 52-week correlation of Bitcoin with the dollar/yen pair remains around -0.90. For the crypto market, a strong dollar is more dangerous than a weak yen. This time, however, the geopolitical backdrop helped risk assets: de-escalation signals around Iran supported risk appetite.
Liquidity dynamics looked much more important. Tether’s capitalization fell to $183 billion from nearly $190 billion in April, and USDC dropped to $72 billion. A decline in stablecoins is usually interpreted simply: there is less free money for purchases, market depth is thinner, and willingness to take risks is weaker.
At the same time, on-chain data looked better. Glassnode recorded an increase in active addresses and transfer volumes above upper statistical boundaries. The ratio of supply held by short-term and long-term holders remained near historical lows. Long-term investors were in no hurry to leave, but the share of coins in profit approached a cyclical bottom, so sales increasingly looked like loss-taking rather than profit-taking.
How the Coldcard Vulnerability Turned Into a Major Attack
The Coldcard incident was not a classic hack in which the attacker needs to physically obtain the device. The error appeared in the March 2021 firmware build: seed phrase generation was directed to a software pseudo-random number generator instead of a hardware one. Because of this, keys could be recovered offline by brute-forcing a limited range.
In essence, the failure affected the basic principle on which any cryptocurrency wallet relies: reliable entropy, correct seed, and secure phrase. In a normal architecture, computer hardware, firmware, and software should work together so that the private key cannot be predicted. Here, the firmware itself became the weak link.
The first wave on July 30 took only 25 minutes and brought the attackers 594 BTC. Then the attack intensified: by August 2, three waves had emptied 4,585 addresses, and the next day researchers recorded a fourth. According to Galaxy Research, at least 15 independent attackers joined the scheme, and total losses could reach 2,055 BTC, or about $130 million. On average, the stolen coins had been dormant for 3.18 years.
Coinkite released an emergency firmware update for all affected models and on August 4 reached out to owners directly. This became the manufacturer’s main public response: quickly close the vulnerability with an update and deliver a warning to those who may not have touched the device for years. At risk were Mk3 on firmware 4.0.1 and newer, as well as Mk4, Mk5, and Q on older versions. Wallets created using the dice roll option did not use the problematic code and were not affected.
“Treat this as urgent. Move your funds,” Coinkite warned, asking to inform those holders who rarely go online about the risk.
What to Know About Coldcard
Coldcard is a specialized hardware wallet for Bitcoin, not a universal multi-currency device. It is valued for its self-custody model: private keys remain on the device, and operation can be organized without constant internet connection, including data transfer via SD card.
Coldcard’s strengths are its focus on Bitcoin, key isolation, hardware entropy generation, and additional security modes. These include Duress PIN for scenarios where the owner is under pressure, Brick PIN to lock the device, and BIP39 Passphrase as an extra layer of protection for the seed phrase. The weakness is a high entry threshold: a beginner needs to carefully understand the firmware, backup, PIN, and transaction signing order.
The lineup includes Mk3, Mk4, Mk5, and Q. After the attack, it became clear that not only the model, but also the firmware version matters: it was the old versions on certain devices that remained at risk. Before first use, the safe procedure looks like this: check the device and firmware, create a wallet, write down the seed phrase offline, save a backup, set up the PIN, and only then transfer a significant amount.
Coldcard does not have a separate mobile scenario like a standard exchange app: the device is used together with compatible wallets and programs for preparing and signing transactions. This approach gives more control but requires caution from the owner.
After the attack, the debate over self-custody flared up again. Vincent Bouzon, product security director at Ledger, summed up the main lesson as follows:
Any wallet ultimately relies on a root secret created from high-quality entropy. Entropy generation must be anchored in secure hardware.
The technical discussion went far beyond a single error. Market participants once again spoke about the entire chain of risks that a hardware wallet owner must keep in mind:
- Supply chain risks.
- Phishing.
- Firmware updates.
- Device booting.
- Working via USB.
- Using SD card.
- Reliability of printed circuit boards and controllers at the Microchip Technology level.
- Coercion scenarios.
- Evil maid attacks, where the device can be replaced or altered without the user’s knowledge.
In such systems, even a PIN will not save you if the original seed phrase is predictable.
The topic of computer security became central: self-custody does not disappear as an idea, but its risk turned out to be more complex than many were used to thinking. Transferring coins to a centralized exchange is also not the same as ownership—it’s more of a requirement for an intermediary. But a hardware wallet, even if it says COLDCARD on the case, does not eliminate the risks of firmware, supply, and human error.
“The hardware self-custody segment is in a catastrophic state and is damaging the industry’s reputation more than anything else,” said Lorenzo Valente, director of digital asset research at ARK Invest.
Eric Balchunas of Bloomberg Intelligence noted that a spot fund relieves the investor of the need to manage a seed phrase, and questioned whether Coldcard’s small team of five people can withstand increasingly sophisticated attacks for long. The market, however, did not collapse: by August 4, Bitcoin had risen to $64,160.
Strategy Sells BTC, and the First Spot Bitcoin ETF Closes
The institutional part of the week also gave the market food for thought. Michael Saylor’s Strategy sold 1,638 BTC for $104.73 million. This is already the company’s third sale this year. The average deal price was $63,957, which is noticeably below the company’s average purchase price of $75,419.
The proceeds were directed to dividends and the buyback of STRC preferred shares. The logic was explained by the quarterly report: the loss for the second quarter reached $8.22 billion due to the revaluation of the bitcoin position, although the company’s total reserve grew to 843,775 BTC. The cash reserve reached $3.75 billion—about 2.1 years of dividend payments. The “Never Sell” rule, which had supported the MSTR share premium for years, has effectively become a thing of the past.
Another symbolic event was Hashdex’s decision to liquidate the DEFI fund. This is apparently the first closure of a US spot Bitcoin ETF in the segment’s history. The fund had $14.7 million under management, while BlackRock’s IBIT held $47.08 billion. Trading is set to cease on August 17.
Overall, the segment accumulated $51.5 billion in net inflows, but the money is concentrated in two or three of the largest products. For the week ending August 2, US spot bitcoin funds lost $61.53 million. Intra-week movements were sharper: on July 30, $233.1 million came in, the next day $265.4 million left, and on August 3, $170.1 million returned.
Tokenization of Real-World Assets Is Gaining Scale
While retail interest in crypto funds cooled, BlackRock strengthened its tokenization direction. On August 4, the company opened tokenized access to European money market funds with a total volume of $311 billion. Twelve new share classes were issued for six funds in 15 jurisdictions.
The project was implemented jointly with JPMorgan on the Kinexys platform. A day earlier, BlackRock expanded a similar offering in the US. The tokenized real asset market grew by more than 200% over the year and exceeded $30 billion, and Citi expects the segment could reach $5.5 trillion by 2030.
“This is exactly what investors want to see in cash management: scale and liquidity,” said Becky Milchem, head of international cash management at BlackRock.
Regulation Stalls Again
Progress slowed on the regulatory front. The CLARITY Act on the structure of the digital asset market passed the House of Representatives but remained in the Senate calendar without a voting date. Recess begins August 7, and by August 5, the chances of the bill passing had dropped to about 27%.
The delay is important for the entire market: CLARITY is supposed to establish the division of powers between the SEC and CFTC. The need for this was demonstrated by the same week. The SEC suspended approval of cash-settled options on the QBTC bitcoin index on Nasdaq PHLX after an objection from CME Group, which insists that Bitcoin is a commodity and should be overseen by the CFTC.
While the US stalls, other jurisdictions are moving forward. On August 4, South African lawmakers introduced draft rules for cross-border crypto transfers.
Altcoins: BNB Rose, Ethereum and XRP Fell, Solana Held Steady
For individual assets, the week was calm. Bitcoin ended the period at $63,995, losing 0.84% and 0.15 percentage points of dominance. Ethereum fell 2.53%: fund inflows totaled only $27.4 million and could not support the price, nor could corporate purchases.
Ethereum buyers remained active, however. BitMine Immersion Technologies increased its holdings to 5.7978 million ETH, or 4.8% of circulating supply, with 87% of that amount staked. The network’s infrastructure strengthened: on August 4, Coinbase’s Base surpassed Solana in managed institutional DeFi capital, exceeding $1.6 billion. Ethereum accounts for 43.2% of the US tokenized government debt market.
BNB was the only top-five asset to close the week in the green. The coin gained 4.4%. The support came not so much from speculative interest as from real network usage: BNB Chain accounts for about 40% of global stablecoin transactions. In addition, BNB ranked second among 18 assets in the new S&P Pantera index.
XRP fell 2.33%, although institutional demand moved in the opposite direction. Spot funds for the token attracted $15 million for the week, and total inflows reached about $775.5 million. On August 4, wrapped XRP from Flare received approval in the RLUSD credit pool for $280 million.
Solana changed little, declining by just 0.13%. On August 1, the Agave 4.2 update was released, and validators began supporting a proposal to increase daily SOL burning from $47,000 to $650,000. The institutional channel remained open: spot funds for SOL accumulated $1.14 billion in net inflows, and Morgan Stanley launched its own product with a 0.14% fee and staking rewards.
The strongest asset of the week was Cardano: its capitalization grew by 24%. But the growth was narrow. The number of non-empty ADA wallets decreased by 7,070 over two months, so the price movement was likely driven by a few large buyers and record open interest in futures, rather than a return of mass demand.
Weekly Performance of the Largest Cryptocurrencies
- Asset: Bitcoin (BTC). Price on July 29: $64,538. Price on August 5: $63,995. Change: -0.84%.
- Asset: Ethereum (ETH). Price on July 29: $1,916. Price on August 5: $1,868. Change: -2.53%.
- Asset: Binance Coin (BNB). Price on July 29: $571.25. Price on August 5: $596.42. Change: +4.40%.
- Asset: Ripple (XRP). Price on July 29: $1.09. Price on August 5: $1.06. Change: -2.33%.
- Asset: Solana (SOL). Price on July 29: $73.95. Price on August 5: $73.86. Change: -0.13%.
- Asset: total market capitalization. Value on July 29: $2,201 billion. Value on August 5: $2,188 billion. Change: -0.58%.
What the Week Showed
By the end of the seven-day period, the crypto market capitalization stood at $2,188 billion, down $12.7 billion. The market’s resilience looks ambiguous: on the one hand, the holder base has become noticeably stronger; on the other, there is not enough fresh money to confidently turn prices upward.
The main risk in the coming days is low volatility. BVIV has dropped to a historical floor, and from such levels, the index usually exits with a sharp move. The direction is not obvious in advance. For Bitcoin, the key mark remains $65,189—the upper boundary of the past week. Another reference point is the fate of the CLARITY Act, for which August 7 became the de facto deadline before the Senate recess.
Bitcoin (BTC)
As of the evening of August 5, Bitcoin was trading around $63,995 and lost 0.84% for the week. About $10.67 billion left its capitalization, and it was just short of reaching $1,300 billion. Bitcoin’s market share fell by 0.15 percentage points to 58.68%.
The options market was more indicative than the price itself. On Deribit, activity was concentrated on $60,000 puts and $70,000 and $72,000 calls. Traders essentially marked the boundaries beyond which movement could accelerate, but during the week, the price did not approach either.
Ethereum (ETH)
Ethereum’s market share fell by 0.21 percentage points to 10.30% for the week. The price dropped to $1,868, and capitalization lost about $5.93 billion. At the same time, the fundamental picture looked stronger than the quotes: BitMine Immersion Technologies added 10,399 ETH and nearly reached 5% of total supply.
Analysts remained cautious. TD Cowen lowered its target price for SharpLink shares to $13, revised its forecast for Ethereum for 2026, but confirmed a long-term positive view of the network. Institutional interest is increasingly shifting from the token’s price itself to the infrastructure around it.
Binance Coin (BNB)
BNB finished the week at $596.42 and was the only top-five coin to post gains. Capitalization increased by about $3.28 billion, and the coin’s share rose to 3.63%.
The growth was based on real activity on BNB Chain, which handles about 40% of global stablecoin transfers. At the same time, the network is developing standards for AI agents—identification, payments, and accountability for autonomous programs. For an asset whose value has long been primarily tied to exchange activity, this is a significant shift.
Ripple (XRP)
XRP traded at $1.06 and lost 2.33% for the week. Capitalization shrank by about $1.70 billion, and market share fell to 3.03%. At the same time, funds for the token continued to accumulate assets.
Developers proposed the xrpld v3.3.0 update with private token balances, batch transactions, and sponsored fees, where a third party pays the transfer fee. For banks, this is an important option: it eliminates the need to hold XRP reserves solely for network fees.
Solana (SOL)
Solana fell by just 0.13% to $73.86, but its market share grew by 0.01 percentage points to 1.96%. Capitalization decreased by only $0.03 billion, while the rest of the market declined more sharply.
The network continued to expand external partnerships. MoneyGram became a Solana validator, and Solana Pay launched a pilot with Korean processor KSNET. Such integrations give the network a payment flow less dependent on the speculative cycle.
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