---
title: 'Darkest Moment in Bitcoin Happening Now! (Act Quickly)'
source: 'https://youtube.com/watch?v=NX1q7Xj4eAE'
video_id: 'NX1q7Xj4eAE'
date: 2026-08-06
duration_sec: 891
---

# Darkest Moment in Bitcoin Happening Now! (Act Quickly)

> Source: [Darkest Moment in Bitcoin Happening Now! (Act Quickly)](https://youtube.com/watch?v=NX1q7Xj4eAE)

## Summary

The video discusses a critical security vulnerability in Coldcard hardware wallets, where an entropy bug in firmware from 2021 allowed attackers to drain funds from wallets created between 2021 and 2023. It also covers the broader market context, including rising bond yields and the status of the Clarity Act, and provides advice for affected users.

### Key Points

- **Coldcard Vulnerability Warning** [00:03] — A prominent Bitcoin self-custody cold wallet company, Coldcard, has been compromised. 600 Bitcoin ($38 million) has been stolen from dormant single sig wallets. Users who generated a single key wallet on Coldcard between 2021 and 2023 are at risk, especially if they didn't use multi-sig, a passphrase, or dice rolls.
- **Cause of the Entropy Bug** [01:48] — The cause is an entropy bug from a 2021 firmware rewrite related to seed generation. The safety check only verified that a setting existed, not that it was enabled, leading to wallets generating seed phrases from fake randomness that could be guessed.
- **Impact on Bitcoin Maxi Community** [02:19] — Coldcard was a highly recommended self-custody solution in the Bitcoin OG maxi community. Many individuals are losing life savings, and prominent figures are sharing their shock and frustration.
- **Dice Rolls as Protection** [04:33] — Users who rolled dice (100 dice or one dice 100 times) to add entropy to their seed phrase are safe. This feature was available on Coldcard but not widely used.
- **Responsible Disclosure Challenges** [05:37] — The exploit is unique because it cannot be patched retroactively; the issue is at seed generation time. Coldcard didn't keep user data, making it impossible to alert affected customers without alerting hackers.
- **Immediate Actions for Affected Users** [07:43] — Affected users should move funds immediately. Options include using multi-sig if possible, or sending funds to an exchange temporarily. Rushed moves create openings for scammers.
- **Market Context: Bond Yields and Clarity Act** [08:42] — Bitcoin's dip is largely due to the bond market, with the US 30-year yield at 5.27%, the highest since 2007. The Clarity Act appears dead, but the Stablecoin Genius Act passed, and Circle received a trust charter from NYDFS.
- **Bank Support for Crypto** [09:52] — Former Barclays CEO Bob Diamond and others express support for blockchain and tokenization, noting that major banks like JP Morgan and Goldman Sachs are investing heavily and will benefit from crypto innovation.
- **Hope for Clarity Act** [12:11] — Anthony Scaramucci and others see a sliver of hope for the Clarity Act, citing bipartisan ethics provisions and the need for clear federal guidelines to avoid regulatory seesaw.
- **Bitcoin Price Prediction** [14:29] — If Bitcoin stays above the 21-day and 50-day moving averages, it could rally toward $73,000 and potentially $83,000 in August.

### Conclusion

The Coldcard exploit is a severe blow to self-custody, highlighting the importance of robust security practices. While the market faces headwinds from bond yields and regulatory uncertainty, there is optimism for long-term adoption and potential price recovery.

## Transcript

today. Many people are saying this is the dump before the pump, especially with there being renewed hope on the horizon with the Clarity Act. >> We're talking about blockchain. A number of the banks that have been investing
will be big winners in this. >> But, in the short term, some things couldn't be worse. People are losing a lot of money. A dark day for Bitcoin self-custody today. >> I researched a lot, and this
was like the best way to store your Bitcoin. by this. >> If you know somebody who self-custodies their Bitcoin, send them this video today. I'm going to go over it because
you still have a chance to save your Bitcoin. Altcoin Daily keeps you informed on everything crypto everyday. So, smash the like button if you So, smash the like button if you appreciate us not taking the summer off.
Let's start here. We posted this warning on X very quickly as the information was follow us on X. Takes us hours to make a YouTube video. It takes us seconds to update you on X. Now, this is what you need to know. A prominent Bitcoin
need to know. A prominent Bitcoin self-custody cold wallet company called Coldcard, many wallets are being drained. Thus far, 600 Bitcoin or $38 million has been stolen from dormant single sig wallets. Send this to
somebody who uses Coldcard. Now, not every Coldcard is affected, but you are probably at risk if you generated a single key wallet on Coldcard between 2021 and 2023. If you didn't do multi-sig, if you didn't do a
passphrase, if you didn't roll the dice, I'll explain more on that in just a second, you are at risk, and you should move your funds immediately. The cause of this is being called an entropy bug from a 2021 firmware rewrite that had to
do with seed generation. Note, this does not affect Ledger, this does not affect Trezor, this does not affect any other hardware wallet. Stay calm, rushed moves create openings for scammers. But yes, if you've never heard of Coldcard or
never used a Coldcard, it is because Coldcard is a rather niche self-custody solution built by Bitcoin maxis with a community of Bitcoin maxis. Coldcard was actually known as a blue chip in the
Bitcoin OG Bitcoin maxi space for self-custody. Our hearts go out to anyone who lost money because we have seen stories Bitcoin maxis are losing their life savings because of a very stupid mistake by Coldcard. So, tensions
are high today. A lot of prominent individuals in the Bitcoin space are coming out and sharing their story. >> I'm shocked >> I'm shocked too because I'm shocked because
I researched a lot and this was like the best way to store your Bitcoin. Everybody and their mother would swear by this. And for it to be hacked,
And for it to be hacked, like you really need to be like like you really need to be like in the head. stay safe out there, guys. You can't even trust anybody. Like right
now, I'm thinking like what what's next? Like what am I even going to do? Like can I even trust anything? >> So, let's put what happened in plain >> So, let's put what happened in plain simple English. The code for Coldcard
had a safety check to confirm that real randomness was in use, but the check only asked, "Does this setting exist, but not is it turned on?" And that setting was off. So, the wallets made keys, seed phrases, from fake
randomness, and fake randomness can be guessed. Again, this only happened to Coldcard. This was perhaps the number one most recommended Bitcoin self-custody solution in the Bitcoin OG maxi community. Many are coming out and
negligence, plain and simple, a vulnerability sitting in firmware since 2021. I'm crushed for everyone affected. I've been recommending Coldcard for years now, but just know I've moved everything. Again, you could have
particular product if you would have rolled the dice. For those who took the time to roll 100 dice or one dice 100 times, your Bitcoin is safe." >> So, the first advanced feature I'd like to cover on the Coldcard is creating a
to cover on the Coldcard is creating a seed phrase with entropy via dice. And on the the Coinkite website, you can actually pick up these little bags of of dice, uh so that you can basically do a whole bunch of rolls all at once, and
then input these dice rolls to add entropy to the creation of your seed phrase. Basically, what this is used for is if you don't trust Coldcard or Coinkite to generate a seed phrase for you that can't be replicated, then you
can inject all of this other data into it and change the seed phrase with each new data point that you input. And you can replicate this and prove that the job. >> Bitcoin self-custody doesn't really seem
ready for primetime if the only way you could have avoided this is rolling 100 dice. And this is what's really crazy about this exploit and why it's not a normal exploit we typically see. What's crazy about this Coldcard attack is that
it doesn't really seem like there's a clear way to responsibly disclose this. vulnerabilities where you can patch the software quietly in the background and let at least some portion of the ecosystem upgrade, in this case, it
doesn't matter if you upgraded since the issue is at the point in time of the seed generation. What's even worse is that with self-custody setups in many cases, you can't reliably inform impacted customers. Either fake contact
records are deleted not stored for privacy, or the company can't know where the expub or Bitcoin wallet came from. You also have no way to know when seeds
were generated and with what firmware. But by the way, Coldcard didn't keep user data anyway. They didn't have an email list to alert their customers. But even if they did, think about this. This is a scary thought experiment. If
Coldcard had found this exploit themselves, how could they have fixed it without instantly putting all of their customers' coins at risk? Patching the firmware wouldn't fix vulnerable seeds. And the moment they emailed customers,
assuming they hadn't purged records which they did, or released the patched firmware, this would have alerted hackers to the exploit and began draining wallets. One of the only ways to have saved vulnerable coins would
have been to alert a white hat group before any public disclosure who could have preemptively seized vulnerable coins and then let people provide non-cryptographic proof of ownership, which would have been a complete mess,
invited massive lawsuits, and likely an impossible task unless they used a KYC exchange before to purchase the coins, in which case you could maybe prove a linkage. Isn't that crazy? So, the bigger headline here is that the first
unsophisticated, probably stumbled upon this exploit using AI, isn't sweeping all the coins in the wallets, etc. But, now that the exploit is known, other professional attackers will be coming quickly and cleaning house. You do not
Multi-sig if you have the equipment/time. Send them to an exchange temporarily if you don't. Hate to say it, but that's the reality. Again, the it, but that's the reality. Again, the OG Bitcoin maxi community is reeling
from this. A dark day for them, but also a dark day for self-custody. It's going to be hard to recommend and it's going to be hard for new people to choose self-custody when things like this happen. Truly a dark, dark day for
self-custody, especially with it seeming like a disproportionate amount of OG Bitcoin believers are affected. But, even with that hack exploit, I personally think that has a small effect on today's price action because really
the industry has been largely moving away from self-custody since about 2024. Probably the most obvious reason why Bitcoin is dipping today is because the bond market is out of control. The US 30-year yield is now up
to 5.27%, its highest level since June of 2007. Even without rate hikes or Fed guidance, the market is sending rates higher, operating exactly how Fed Chair Warsh wants it to operate. Also, despite huge
pushes in the TradFi industry, the Clarity Act at this point seems pretty Clarity Act at this point seems pretty much essentially dead in the water. The Stablecoin Genius Act passed a little over a year ago and we're seeing the
fruits of passing clear regulation for an industry. Circle has received a limited purpose trust charter from the New York Department of Financial Services for Circle New York Trust. The CEO, Jeremy Allaire, said the approval
places USDC within a strong, respected framework. That's exactly where we want to put crypto at large. The night is always darkest before the dawn. It seems
like banks are finally starting to admit the crypto Clarity Act is actually good for banks. The former Barclays CEO, Bob Diamond, explains this on CNBC. >> We're talking about blockchain, which has a permanent record in perpetuity of
every transaction that happens, and all of it at a fraction of the cost with deeper liquidity. These things are very, very positive, and I think the investments that are being made by the banks that a number of the banks that
in this. >> Let's talk about regulation and the Clarity Act, because you're somebody who has a pretty unique perspective on this. You come at this both from Hyperliquid secure Hyperliquid strategies and, you
know, understanding the crypto side of things of this, but also from the banks as the former CEO of Barclays. Who's right in this? This has pitted those two sides against each other. The banks have been really mad about the idea that you
could give away you could give away some of their they're highly regulated. They should have a first rights at some of these >> I think this is really good for the banks over time, and I'll come back to
cuz I think Becky that's an interesting one. But, no one is investing more in innovation right now than JP Morgan, Morgan Stanley, Goldman Sachs, Bank of
New York. The large, most successful banks are going to benefit from this. What we're talking about is innovation. What we're talking about is is 24 hours, you know, trading 24/7. We're talking about instantaneous settlement, which is
a positive thing. We're talking about blockchain, which has a permanent record in perpetuity. That was a little bit duplicative, but in perpetuity of every transaction that happens, and all of it at a fraction of the cost with deeper
liquidity. These things are very, very positive, and I think the investments that are being made by the banks, that a number of the banks that have been investing will be big winners in this. And a number of the infrastructure
stablecoin. I think Hyperliquid is a great example in blockchain will also be winners. >> There is still a sliver of hope this gets passed. Anthony Scaramucci writes, "Senator Tillis and Gallego have worked
out a very strong bipartisan ethics provision. If the president ultimately signs off, which I think he will, who will stand in the way of clarity? If Dems or GOPs in the pocket of bank lobby stand in the way, they will regret it in
November. And it's just common sense to pass this bill." On Fox Business, the pass this bill." On Fox Business, the Abra CEO explains simply why crypto and tokenization is the future, and the Clarity Act is simply common sense.
>> You say sure, we're talking about things like Bitcoin today, but the future is really about tokenization. Is that right? >> Absolutely. I mean, look, the the financial system is moving towards an
always-on borderless system. And it's certainly incumbent upon the US to play a leading role in that. Right? Investment advisory systems, broker-dealers, they're all moving towards tokenized always-on systems
based upon crypto and smart contract rails that are going to enable all kinds of services that consumers don't have access to today. And as I said, we you everything else going on you just mentioned is for the US to lead.
>> What kind of policy, what's the single biggest policy change that the administration needs to make to, in fact, move toward the future that you're something else?
that I think matter. The SEC and the CFTC have done a fantastic job of undoing the damage of the last administration and starting to make rules and do rule making that actually makes sense. They're actually
communicating for the first time in a long time as far as we can tell and doing rule making that actually is paving the road for a tokenized future that enables prediction markets, enables always on perpetual futures markets
based upon these crypto rails that make a lot of sense and are exactly what a lot of sense and are exactly what consumers want. Now, we need to codify consumers want. Now, we need to codify these rules as law and give startups and
entrepreneurs very explicit federal guidelines to be able to get licenses Clarity Act does, so that the next administration who may see it differently doesn't basically create this seesaw of rule making that just
confuses the markets. >> If Bitcoin can pop back up and stay above the 21-day moving average and 50-day moving average, I would expect to see Bitcoin rally toward 73,000 and potentially 83,000 in August. We're
going to keep you informed every step of the way. My name is Aaron at Altcoin Daily. Subscribe to our channel, join our team, and I'll see you tomorrow.