🛡️ The Coldcard Wake-Up Call
📰 19 Months, Fully Backed
💰 Yield Recap
📈 Weekly Market Review

This week, security took center stage.

An estimated 1,816 BTC, worth roughly $116 million, was stolen from wallets affected by a Coldcard firmware flaw that weakened seed generation. The incident is a setback for self-custody, but it also reinforces the need for layered security, hardware diversity, and tested recovery processes. Hermetica systems were not affected.

Closer to home, Hermetica’s July attestations are now live. USDh remained fully backed, with total backing of 105%, independently verified. That marks nineteen consecutive months of full collateralization.

Bitcoin self-custody took a serious hit this week.

A Coldcard firmware flaw weakened seed generation on affected wallets, allowing attackers to reconstruct private keys and steal an estimated 1,816 BTC, worth roughly $116 million.

AI’s role in uncovering the flaw remains unconfirmed. Whether or not AI played a role in this case, AI can accelerate vulnerability discovery and edge-case testing, leaving security teams less time between discovery and exploitation.

Hermetica systems were not affected by the Coldcard vulnerability.

For individuals holding meaningful BTC balances, avoid relying on one device, seed, or recovery path. A 2-of-3 multisig setup across different devices or vendors can reduce the risk of a single point of failure, provided recovery procedures are carefully designed and tested. 

For teams, the standard should be higher: independent signers, hardware diversity, tested recovery, defined approval policies, strict limits on who can move funds, and AI-assisted security testing. Open-weight models are especially useful because teams can evaluate and run them in controlled environments. 

Security can no longer depend on a single device, signer, or line of defense. It has to be layered, continuously tested, and built to withstand failures before attackers find them.

USDh's July 2026 attestation is live.

This marks the nineteenth consecutive month of full collateralization, with backing assets held on-chain and independently verifiable.

In summary, as of the snapshot time:

See the full breakdown of USDh’s backing in the published attestations.

The market never closes.

Neither does the opportunity to earn.

This week’s yield:

hBTC: 1.4%
USDh: 8.0%

Bitcoin traded slightly lower this week, falling from the mid-$65,000s toward $64,700. Price remains above the 7-day SMA at $64,153, the 30-day SMA at $63,695, and the 200-week SMA at $63,562, keeping the recovery structure intact even though Bitcoin has not broken above resistance. 

Bitcoin faced two negative headlines this week: a reported Coldcard wallet-drain incident affecting more than 1,816 BTC and Strategy’s disclosed sale of 1,638 BTC. Both could have weighed on sentiment, but BTC only briefly softened before holding near $64,000, suggesting ETF demand helped absorb the pressure. Net spot Bitcoin ETF inflows totaled $626.00M this week, up from $203.84M last week and already above July’s full-month total of $172.43M.

Data Summary:

Simple Moving Averages (SMAs) in Figure 1:

Bitcoin held above its 200-week SMA for a third consecutive week, but the recovery remains slow and range-bound. Price is near $64,704, trading above the 7-day SMA at $64,153, the 30-day SMA at $63,695, and the 200-week SMA at $63,562. The $63,600-$64,200 range is now the key support zone.

The medium-term downtrend remains intact until Bitcoin reclaims the 180-day SMA at $69,214, while the 360-day SMA at $85,094 remains the larger bull-trend confirmation level. Near-term support levels are $64,200, $63,700, and $63,600, while resistance levels are $65,500, $66,600, and $69,200.

Net inflows totaled $626.00M this week.

Spot Bitcoin ETF flows accelerated after last week’s $203.84M of net inflows. August has already recorded $626.00M of net inflows, above the $172.43M recorded for all of July, pointing to stronger ETF demand. The reported Coldcard incident may have strengthened the case for ETF custody, allowing some investors to reduce self-custody risk at the margin without reducing BTC exposure. Cumulative spot Bitcoin ETF net inflows now stand at $51.95B, while total spot Bitcoin ETF net assets are $79.21B.

DVOL fell to 34.55% from 35.60% last week, pushing Bitcoin implied volatility deeper into the lower end of its one-year range. Traders are still not paying aggressively for downside protection, suggesting the market sees recent pressure as contained rather than regime-changing.

The equal-weighted basis across observed maturities fell to 4.02% APR from 4.22% last week. The curve remains positive, but its shape changed: the front end repriced lower while the back end stayed firm. August 14 is now the curve low at 3.10%, while December 25 is the curve high at 4.44%, leaving a low-to-high spread of roughly 1.3 percentage points.

Rate risk moved higher this week. The 2-year Treasury traded near 4.22%, the 10-year near 4.64%, and markets lifted September hike odds to 56.7% after reports that Fed Chair Warsh remained open to another hike. The next formal Fed catalyst is the July 28-29 FOMC minutes on August 19, but markets already repriced around sticky inflation risk, oil, and a Fed that is not ready to ease.

Energy and industrial inputs kept pressure on the macro backdrop. Brent traded around $79-$82 this week, falling near $79 on hopes of an Iran-Oman shipping-route agreement before rebounding to $81.56 as uncertainty around Iran and the Strait of Hormuz returned. Copper also hit a record $6.703/lb, supported by AI infrastructure demand, tariff pressure, and supply constraints. That keeps AI tied directly to inflation, not just equity multiples: the buildout is still pulling on chips, power, copper, memory, and equipment.

For Bitcoin, the setup remains range-bound but resilient. BTC held near the mid-$64,000s despite the shocks: the Coldcard incident and Strategy’s BTC sale. Both headlines could have weighed on BTC, but price held near $64,000. ETF inflows, lower volatility, and long-term buyer support helped absorb the pressure.

Sincerely,
The Hermetica Team