The recent Coldcard security breach is now visible on the blockchain, with a significant movement of bitcoin from long-term holder wallets. According to Glassnode data, roughly 210,000 BTC have left long-term holder (LTH) wallets in the past week, marking the largest decline since December 2024. This shift is not typical profit-taking but rather a migration in custody following the Coldcard incident.
Long-term holders are entities that have held coins for over 155 days, often considered the market's "smart money." Their supply has dropped from nearly 15 million BTC to approximately 14.7 million BTC, a notable decrease.
Historically, such distribution waves have occurred near market peaks, but this time it's happening with bitcoin trading around $64,000, 50% below its all-time high. This suggests the movement is not selling but a response to the security breach, where users are moving funds to newly generated wallets or regulated custody services.
The Coldcard exploit, caused by weak randomness in firmware, allowed attackers to reconstruct recovery phrases and drain funds, with losses up to $114 million. Coldcard urged affected users to generate new wallets, as updating firmware couldn't secure compromised keys.
This on-chain movement doesn't necessarily mean loss of conviction. Instead, it reflects a broader shift in how bitcoin is stored, possibly boosting demand for regulated custodians and spot bitcoin ETFs. Indeed, U.S. spot bitcoin ETFs saw inflows of approximately $754 million last week, led by BlackRock's IBIT.
In summary, the decline in LTH supply is a custody migration, not a sell-off, and the market's resilience post-hack indicates underlying strength.
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