Bitcoin Breakout Triggers Investor Boom Amid Chaotic Sentiment

Bitcoin's calm August entry was short-lived as it experienced a massive breakout, leading to a surge in investor activity. The global market for risk assets continued to rise, with shares in America and gold breaking highs, while crude oil prices eased on the assumption that supply fears were subsiding. However, Bitcoin lagged behind the S&P 500 by more than 4 indices, indicating low volatility but highly fluctuating sentiment.

The breakout was triggered by a key event: the exploitation of a five-year-old flaw in Coldcard hardware wallets, resulting in the theft of approximately $38 million worth of Bitcoin from about 500 self-custodied wallets. The reaction on the blockchain saw users move funds to new addresses, with Revived Supply 1-year shooting up to nearly 119,423 BTC over three days.

The institutional sector took a step back, with demand-side factors changing. US spot Bitcoin ETFs returned roughly 65.8K BTC to the market in June, its worst month of the year, and a total figure for 2024 was much higher at over 218K BTC. The corporate market is still buying but hasn't fully counteracted ETF outflows.

The options market tells a story of a rift between calm prices and chaotic sentiment. Implied volatility at the top came close to 23%, its highest low, while the downside IV stayed at its average. The weekly 25-Delta Skew moved more than 8 points in the same session for minimal spot movement.