The incident shows that even established custody solutions cannot provide absolute security. At the same time, the Bitcoin price has proved remarkably resilient: despite the theft, Strategy’s sale of bitcoins and continued uncertainty surrounding the CLARITY Act in the United States, Bitcoin remains above USD 60,000.

^{Chart: Galaxy Research attributes 1,596 stolen bitcoins from around 7,300 addresses to the Coldcard attack with a high degree of confidence. Including suspected but unconfirmed cases, the loss could rise to approximately 2,000 bitcoins, equivalent to USD 130 million. | Source: Galaxy Research}

The weakness affected key generation, not Bitcoin

Hardware wallets are regarded as a particularly secure custody solution for private individuals. They generate and protect the private keys used to authorise Bitcoin transactions. The bitcoins themselves are not stored on the device but remain part of the decentralised network.

In the current incident, the vulnerability was located in the firmware of certain Coldcard devices. A programming error meant that the private keys were not generated with the intended level of randomness. This allowed attackers to narrow the potential key space, reconstruct affected keys and transfer the associated bitcoins.

The incident was therefore not an attack on the Bitcoin protocol. It affected an application that manages access to the protocol. For those affected, this distinction is technically important, although it does not change the loss of their bitcoins.

Why randomness is critical for Bitcoin

A private Bitcoin key can be selected from 2²⁵⁶ possible combinations. This corresponds to approximately 10⁷⁷ different values. By comparison, the number of atoms on Earth is estimated at around 10⁵⁰.

Given this vast universe of possibilities, a correctly generated private key cannot realistically be guessed, even with powerful computers. This security depends, however, on the source of randomness providing sufficient entropy.

That was precisely the problem with the affected devices. The firmware flaw significantly reduced the number of keys that could actually be generated. A task that would normally be computationally infeasible consequently became solvable for the attackers.

The incident highlights the difference between Bitcoin’s cryptographic security and the security of individual implementations. Even a robust protocol cannot prevent defective code, inadequately tested firmware or weaknesses in key generation.

A wake-up call for the entire industry

The theft is a wake-up call for hardware-wallet manufacturers and providers of applications that interact with the Bitcoin protocol. It is at least striking that the incident coincides with the broad release of the new open-source AI model Kimi K3. Powerful and freely available AI models lower the technical barriers to automated vulnerability discovery.

This does not necessarily establish a direct causal link between Kimi K3 and the Coldcard incident. It does, however, underline how quickly attackers’ capabilities are developing. Developers and providers of security-critical applications should therefore use the same AI models to review their systems continuously and make them more secure.

Bitcoin holds firm despite negative news

Bitcoin continues to trade above USD 60,000 and has so far reacted with remarkable composure to the latest headwinds.

The wallet theft was not the only adverse development. On Monday, Strategy announced that it had sold 1,638 bitcoins during the previous week, adding to selling pressure.

Meanwhile, the prospects of the CLARITY Act being passed soon are diminishing. The regulatory framework is intended to establish clearer responsibilities and rules for the US crypto market.

^{Chart: Changes in market expectations regarding the Digital Asset Market CLARITY Act of 2025 (H.R. 3633) being enacted by the end of 2026. The probability shown is based on prices in the Polymarket prediction market and does not represent an official assessment. | Source: Polymarket; legislative reference: Congress.gov.}

The reasons for Bitcoin’s current stability can only be a matter of speculation. However, the market’s behaviour also allows for a more positive interpretation. If even a succession of negative headlines cannot push the price materially below USD 60,000, this could indicate that Bitcoin is generally tending towards oversold conditions.

Important legal information

_{This publication is intended for information and marketing purposes only, and does not constitute investment advice or a specific individual investment recommendation. It is not a sales prospectus and does not constitute a request, an offer, or a recommendation to buy or sell investment instruments or investment services, or to engage in any other transaction. Maerki Baumann & Co. AG does not provide legal or tax advice. Investors are therefore advised to obtain independent legal or tax advice concerning the suitability of such investments, since their tax treatment depends on the personal circumstances of the investor in question and is subject to change at any time. ­Maerki Baumann & Co. AG holds a Swiss banking licence issued by the Financial Market Supervisory Authority (FINMA). This publication is expressly not intended for persons domiciled in Germany or so-called U.S. persons.}
 

Editorial deadline: 5 August 2026

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