Stable Bitcoin Price Masks Underlying Market Stress
Bitcoin's price movement in August has been calm, with the global market for risk assets continuing to rise. Shares in America and gold reached new highs, while crude oil prices eased due to subsiding supply fears. Meanwhile, Bitcoin's price was relatively stable, closing just above its previous day's value but lagging behind the S&P 500 by over 4 indices.
The market's low volatility has been accompanied by fluctuating sentiment, with investors remaining cautious. However, a recent event may have sparked stress in the market: a five-year-old security flaw in Coldcard hardware wallets was exploited on July 31, resulting in the theft of approximately 594 bitcoins (worth around $38 million) from about 500 self-custodied wallets.
The incident led to a large-scale movement of funds, with Glassnode data showing that Revived Supply 1-year shot up to nearly 119,423 BTC over three days. While 10% of the stolen coins ended up on exchanges, the market's shallow depth meant that the price was barely affected.
The institutional sector has also taken a step back, with demand-side factors changing. US spot Bitcoin ETFs returned around 65.8K BTC to the market in June, their worst month of the year, and have returned over 218K BTC for the year so far. Despite corporate buying, this hasn't fully offset ETF outflows.