Coldcard Flaw Sends Bitcoin Hot Supply Up 98% as 890,000 BTC Moves

Key Point

K33 Head of Research Vetle Lunde said the Coldcard attack likely drove approximately 890,000 BTC of movement within 7 days. K33 estimated that around 7,300 addresses had approximately 1,596 BTC stolen at the time the report was prepared. The incident stems from a firmware flaw introduced by Coinkite in March 2021 in Coldcard hardware wallets. The flaw may generate wallet seeds with insufficient randomness. On-chain data showed Bitcoin's 7-day hot supply rose from 403,101.95 BTC on July 28 to 797,407.72 BTC on August 4.

Why it matters: Weak wallet seed generation can directly affect custody confidence and may force holders to move coins quickly.

Market Sentiment

Bearish, Stress-on, Event-driven, Volatile.

Reason: K33 estimated that around 7,300 addresses had approximately 1,596 BTC stolen, which points to wallet-security stress rather than routine supply movement.

Similar Past Cases

In June 2023, Atomic Wallet users lost more than $35 million after unauthorized withdrawals hit user wallets, and Atomic Wallet said fewer than 1% of monthly active users were affected. (Fortune) The difference is that the current incident centers on a Coldcard firmware flaw and Bitcoin supply movement.

Ripple Effect

Weak seed generation can turn dormant Bitcoin into sudden active supply, which may increase exchange liquidity and selling risk if holders rush to move funds. If further attack waves appear, then exchange inflow monitoring can show whether the incident remains wallet-specific or spreads into broader BTC market pressure.

Opportunities & Risks

Opportunities: If exchange inflows slow after affected holders rotate wallets, then reduced defensive transfers can be a potential stabilization signal for BTC exposure.

Risks: If coordinated transfers continue, then reducing leverage limits downside from forced or panic-driven BTC movement.