Bitcoin Movement Reaches Year-High Amid Coldcard Hack…Strategy's Sell-Off Risk Also Emerges

▲ Strategy (MSTR), Bitcoin (BTC)/AI Generated Image ©

Following the hacking of a Coldcard wallet, which resulted in the theft of 1,596 Bitcoin (BTC), the weekly on-chain movement surged to a year-high of 890,000 BTC. Market research firm K33 warned that this movement could be a signal of increasing market stress beyond just security concerns.

According to investment specialized media FXStreet on August 5 (local time), an estimated 1,596 Bitcoins were stolen in a Coldcard attack targeting approximately 7,300 addresses. The attackers exploited a firmware flaw that failed to generate sufficient randomness during the wallet setup process. This vulnerability increased the predictability of seed phrases, allowing attackers to reconstruct private keys and remotely withdraw assets.

K33 analyzed that the recent surge in Bitcoin transaction activity is highly likely to have originated from the Coldcard attack. Although this incident was confined to a specific product, it raised security concerns across the hardware wallet industry, including Ledger and Trezor. Some users are considering moving their assets to centralized custodians or using multisignature methods.

A surge in on-chain active supply has often appeared near short-term market highs or lows in the past. In bear markets, it reflects panic selling, while in bull markets, it reflects profit-taking or the fear of missing out (FOMO) on further gains. K33 diagnosed that this increase in movement could also be a sign that the Bitcoin market has entered a period of stress.

From an institutional perspective, the risk of Strategy being forced to sell a large amount of Bitcoin immediately was assessed as low. The company has increased its dollar reserves to approximately $4 billion, allowing it to cover its current dividend obligations until November 2028. Since May 29, it has raised $3.13 billion in reserves and secured $3.45 billion by selling approximately 34.55 million shares through at-the-market (ATM) equity offerings. In July and August, it sold 5,226 Bitcoins to raise $320.7 million, which was used for preferred stock STRC repurchases and other purposes.

However, K33 pointed out that Strategy's capital allocation structure is vulnerable during Bitcoin downturns. When BTC is strong, demand for its securities increases, leading the company to raise funds and purchase Bitcoin near market highs. Conversely, in a bear market, it might sell BTC at lower prices to defend MSTR or STRC. At the time of writing, Bitcoin was trading at $64,170, up 1% over 24 hours.

*Disclaimer: This article is for investment reference only, and we are not responsible for any investment losses based on it. The content should be interpreted for informational purposes only.*