Bitcoin’s Three-Front Squeeze Deepens

Bitcoin is still under pressure as a security scare, softer ETF demand, and a rare sale by Strategy all weigh on sentiment. The result is a market that looks fragile in the short term, even though the broader long-term case for Bitcoin has not disappeared.

A Wallet Flaw That Shook Confidence

The sharpest shock has come from the Coldcard hardware wallet issue. Coinkite warned that funds generated with certain vulnerable firmware builds could be exposed, which means the problem is tied to specific seed-generation conditions rather than every device in circulation.

The attack has unfolded in waves and has already become large enough to matter well beyond the affected users:

• Galaxy Research linked the incident to roughly 1,367 BTC drained across more than 4,500 wallets, worth about US$86 million to US$89 million depending on the valuation used.
• Earlier reporting put the first wave near US$38 million, with later waves pushing losses much higher.
• A further wave was also identified, showing that the exploit was not a one-off event.
• Researchers said the transaction pattern closely matched vulnerable Coldcard-generated UTXOs.
• Affected holders were urged to move funds immediately to new wallets created on fixed firmware.

Beyond the direct losses, the breach damaged confidence in self-custody. When a security event touches a product associated with safe long-term storage, traders often react as if the entire market has become more dangerous, even if the flaw is limited to a narrower group. That helps explain why Bitcoin sentiment has weakened so quickly across social channels.

ETF Demand Lost Its Momentum

Spot Bitcoin ETFs provided the second major pressure point. July started with a recovery in inflows after a weak June, but that rebound did not hold with much conviction. Early gains gave way to a mixed stretch, then to renewed outflows once the brief mid-month streak ended.

The flow picture matters because ETFs remain the easiest route for many institutions to gain Bitcoin exposure. Pension funds, hedge funds, and other regulated allocators can buy in without handling private keys, which makes these products a key barometer for institutional appetite.

Recent flow behaviour can be summarised like this:

• June was the weakest month recorded for the category.
• July opened with fresh inflows, including a strong first week.
• There was a seven-day run of net inflows in mid-July, the longest since April.
• That streak broke, and outflows later returned.
• August flow data has not yet given a clear new direction.

For now, that leaves Bitcoin without a strong, steady institutional bid to offset the pressure from the security story. In a market that is already cautious, uneven ETF demand can be enough to keep rallies short-lived.

Strategy Added a Surprise Supply Headwind

The third factor came from Strategy, whose role in the market has usually been associated with accumulation rather than selling. The company disclosed that it raised its USD Reserve by US$250 million and completed an US$81 million buyback of STRC shares, but it also sold 1,637 BTC for about US$105 million between July 27 and August 2.

That sale brought holdings down from 843,775 BTC to 842,138 BTC. The reduction is modest in percentage terms, but it still matters because Strategy has been one of the clearest corporate symbols of long-term Bitcoin conviction. Any sale from that source tends to draw attention, especially when market conditions are already unstable.

What the Price Action Is Saying

Bitcoin has been trading near US$63,600, with the weekly move roughly 1% lower. That may not sound dramatic on its own, but the combination of negative catalysts gives the move more meaning than the headline percentage suggests.

Several short-term factors line up in the same direction:

• Confidence has been hit by the Coldcard exploit.
• ETF flows no longer show the same steady buying pressure.
• Strategy’s sale adds an unexpected source of supply.
• August has often been a weak month for Bitcoin, with more down closes than up closes over the past 13 years.

The larger message is simple: Bitcoin is not being driven by one problem, but by several at once. Security concerns are hurting sentiment, institutional flows have lost momentum, and a high-profile corporate seller has added another layer of caution. Until one of those pressures eases, price action may stay choppy and vulnerable to further downside swings.