Coldcard fallout shows up onchain as 210,000 bitcoin leaves old wallets

This type of spending from this cohort is not profit-taking, but a migration in how bitcoin is being stored following the Coldcard incident. In addition, bitcoin did not make new lows following the hack.

The breach stemmed from weak randomness in affected Coldcard firmware, which allowed attackers to reconstruct some users’ wallet recovery phrases and drain their bitcoin. Thousands of addresses were affected, with estimated losses reaching as much as $114 million. Coldcard subsequently urged affected users to generate new wallets and move their funds because updating the firmware alone cannot secure keys that may already be compromised, according to CoinDesk.

Some of the decline in long-term holder supply could therefore reflect users transferring bitcoin into newly generated wallets with stronger custody arrangements. Other holders may be moving their assets to regulated custodians or spot bitcoin ETFs as they reconsider the risks of self-custody.

ETF flows offer some support, U.S. spot bitcoin ETFs attracted approximately $754 million over the past week, with BlackRock’s iShares Bitcoin Trust (IBIT), accounting for most of those inflows.

The crucial distinction is that on-chain movement does not necessarily mean selling. In this case, the decline in long-term holder supply may be capturing a broader migration in bitcoin custody rather than a straightforward loss of conviction.