Approximately 200,000 Bitcoin has been transferred from long-term holder wallets over the past week, suggesting a shift in how Bitcoin is stored rather than traditional selling. The consequences of the Coldcard security vulnerability are now becoming visible on the blockchain.
According to data from Glassnode, roughly 210,000 Bitcoin exited long-term holder (LTH) wallets in the past week, representing the largest decline since December 2024, when the Bitcoin price was first approaching $100,000. Glassnode defines LTHs as individuals who have held Bitcoin idle for about 155 days (just over five months). This group is often considered the market's "smart money" due to their tendency to hold through short-term volatility. The current LTH Bitcoin supply stands at approximately 14.7 million coins. Before the Coldcard incident, this figure was just under 15 million, close to an all-time high.
Historically, significant spending by long-term holders has often coincided with periods of market strength or peaks. Similar distribution waves occurred during market highs in March 2021, March 2024, and December 2024, when experienced holders took profits amid rising demand. However, this latest movement is happening near a price low. Bitcoin is currently trading around $64,000, roughly 50% below its all-time high from October. This spending behavior from this group does not appear to be profit-driven, but rather a change in Bitcoin storage methods following the Coldcard incident. Furthermore, Bitcoin has not set new lows after the hack.
The security flaw stemmed from weak randomness in the affected Coldcard firmware, which attackers exploited to reconstruct wallet seed phrases for some users and steal their Bitcoin. Thousands of addresses were impacted, with estimated losses reaching $114 million. Reports indicate that Coldcard subsequently urged affected users to create new wallets and transfer funds, as simply updating the firmware would not protect potentially compromised keys. Consequently, the decline in LTH supply is partly attributable to users moving Bitcoin to newly created wallets with more robust custody arrangements.
Other holders may be reassessing the risks of self-custody and are therefore shifting assets to regulated custodians or spot Bitcoin ETFs. ETF flows have provided some support, with U.S. spot Bitcoin ETFs attracting approximately $754 million in inflows over the past week, led by BlackRock's iShares Bitcoin Trust (IBIT). The key distinction is that on-chain transactions do not necessarily imply selling. In this case, the drop in long-term holder supply likely reflects a broader migration of Bitcoin custody methods, rather than a simple loss of conviction.
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