Bitcoin remained largely unchanged over the week despite record-setting gains in major equity benchmarks and gold, leaving the asset more than 4 percentage points behind the S&P 500 over the same period. The divergence came as a hardware-wallet security incident prompted the movement of roughly 119,000 BTC from addresses holding coins for at least a year, yet produced little visible selling pressure in the spot market.
The combination points to a market marked less by panic than by low participation. Holders affected by the Coldcard-related breach appeared to move funds into new storage arrangements, while options markets and fund flows suggested traders were not yet positioning for a decisive directional move.
Bitcoin trails a renewed equity rally
U.S. equities initially weakened after the Federal Open Market Committee kept interest rates unchanged on July 29. The S&P 500 finished that session at its lowest close of the summer, but the reversal was swift. Four days later, the index closed at 7,737, above its previous post-June high, while the Euro Stoxx 50 also reached a record.
Gold joined equities at record levels, while crude oil opened sharply lower after weekend developments reduced the supply-risk premium embedded in oil prices. Bitcoin, which trades continuously through weekends and is often expected to react quickly to shifts in global risk sentiment, did not follow the move.
Economic data added support to the equity rebound. The Leading Economic Index turned higher within two months of roughly a year of declines, while consumer confidence recorded its largest two-month increase since early 2024. Those readings eased concerns that weakening growth would require a more aggressive policy response, even as they pointed to a firmer economic backdrop.
Bitcoin’s muted response left it out of step with the broader rally. The market did not show the strong risk-on behavior that might be expected when stock indexes and gold are simultaneously reaching new highs, suggesting crypto-specific demand remained restrained.
Coldcard exploit triggers wallet migration
A separate shock arrived on July 31, when an attacker exploited a five-year-old key-generation vulnerability associated with Coldcard hardware wallets. The attacker stole about 594 BTC, valued at roughly $38 million at the time, from around 500 self-custody wallets in approximately 25 minutes.
The theft itself was relatively small compared with Bitcoin’s daily trading volume, but it created a security concern for users who feared their seed-generation process might have been exposed. On-chain activity continued for days after the exploit, indicating that affected holders and other users moved coins out of potentially vulnerable wallet setups.
The reported “1+ year revived supply” measure rose to about 119,000 BTC during the three days after the incident. That amount was roughly 200 times the stolen balance, a scale that would normally attract attention as a possible sign of distribution by long-term holders.
Destination data offered a different interpretation. Only about one-tenth of the revived supply moved toward exchange-linked addresses, while new-address creation returned to baseline within three days. Supply held for less than one month rose 40% and continued climbing, a pattern more consistent with coins being transferred into newly created wallets than sold into the market.
Spot prices barely reacted during the episode. The absence of a broad price decline, alongside limited exchange-bound flows, indicates that the security incident led primarily to custody changes rather than a forced liquidation event.
Bottoming indicators remain incomplete
Bitcoin’s subdued trading has also fed into technical and on-chain measures associated with late-stage market weakness. Market bottoms have historically tended to include forced selling, a sharp decline in the share of supply held at a profit, and a jump in realized volatility as sellers capitulate.
Recent readings instead showed gradual compression and unusually low volatility. One composite indicator described as the “sell-side exhaustion constant” — profitable supply share multiplied by realized volatility — entered a range associated with previous bottoming periods.
The signal remains short of the levels seen at definitive cycle lows. Its 30-day average was about one-third above the final floor readings registered during prior bear-market bottoms using the same historical framework. That leaves room for the market to stabilize further without confirming that the full deleveraging process seen in earlier cycles has occurred.
Options markets tell a similarly cautious story. Upside implied volatility fell near a record low of around 23%, while downside implied volatility remained closer to its normal range. The one-week 25-delta skew, which compares demand for upside and downside options, declined by more than eight points in one day even though the spot price barely changed.
A comparable pattern appeared around a July price peak, when skew opened and closed within four days without producing a sustained directional move. Perpetual-futures funding rates have remained near long-run averages, indicating that excessive leveraged long or short positions were not the main driver of those brief swings.
Fund outflows limit the demand case
The demand picture has been weaker than the quiet price action might suggest. U.S. spot Bitcoin funds recorded net outflows of about 65,800 BTC in June, their worst monthly result on record according to the figures provided. That contrasts sharply with late 2024, when monthly net absorption exceeded 218,000 BTC.
Corporate treasury purchases continued during the June period but did not fully offset the fund outflows. The gap matters because spot funds have become a major channel through which traditional-market capital reaches Bitcoin. Sustained redemptions can remove a source of steady market demand even if they do not immediately cause sharp price declines.
Historical volatility comparisons offer a more constructive, though limited, counterpoint. In earlier episodes when one-month realized volatility compressed to similar depths, the eventual expansion in price movement has usually been upward. Those cases did not occur under the same backdrop of weak net flows from U.S. spot funds, making the comparison imperfect.
Bitcoin is therefore entering its next move from a restrained position: security-related transfers have not turned into broad selling, leverage is contained, and volatility is compressed. Yet the lack of durable fund inflows leaves the market without the clear demand catalyst that accompanied stronger advances in previous periods.
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