Bitcoin and ether (ETH) are under pressure as the multimillion-dollar hack of the hardware wallet Coldcard enters a fifth day, raising questions over the safety of direct custody as a holding strategy.
The incident has rocked sentiment on crypto social media, with numerous small holders complaining of losing long-term holdings and reassessing their faith in crypto.
“Worse for sentiment, it [the hack] has spooked holders into sending coins back to exchanges, the opposite of the self-custody trend crypto is built on,” analysts at Marex said. “When the thing wobbling is cold storage itself, a cheaper barrel does not fix it.”
Given the gravity of the situation and the $114 million of bitcoin stolen, the price reaction of the largest cryptocurrency appears relatively restrained. BTC was recently 1.5% lower over 24 hours to $62,595, a level it has visited several times in recent weeks, with ether down nearly 2% to $1,842. The CoinDesk DeFi Select Index has dropped 2.5%.