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G’day Folks,

Ladies and Gentlemen, we got them (and by them, I mean the bears who were short).

Bitcoin just ripped a hole right through the dense cluster of short liquidation levels we covered in Monday’s report.

This is the largest short liquidation event in history, and I had to extend the Y-axis on this chart to the downside quite a bit to fit it in.

The writing was on the wall for the 2025 bull market after several months of heavy selling by Long-Term Holders over-saturated demand. The long liquidation event on 10-Oct was the nail in the coffin.

Based on my analysis ever since 6-Feb-2026 in Welcome to Deep Value, it has been my view that we’re watching the writing on the wall for this bear to be running out of steam.

Time will tell, but I think this short squeeze is something that should, at a minimum, have the bears questioning their thesis.

Today’s post will be my assessment of this short squeeze, and how it fits in the picture of my longer-term bear market thesis.

I’ll cover the signs I am looking for to add even more confidence and conviction behind a durable cycle low being in, and what it will take for upside momentum to take back over.

Start your Premium 7 Day Trial to access today’s Video Update (38 mins), Written Article and TL;DR Summary.

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Leverage is such an enticing tool, and yet it can be so very dangerous.

As emotional creatures, we can often convince ourselves that some future outcome is so certain that it clouds our judgement such that we put a little bit too much at risk.

I would wager that the majority of people reading this have taken a punt at futures or options trading at some stage in their Bitcoin journey.

I’d also wager that the vast majority have also experienced at least one true financial licking whilst doing so, where the market cleaned you out in a way that you will never forget.

The absolute worst result, is when you put on a fat leveraged bet…the market went in your direction just a little bit…then it tanked against you, took out your stop loss, and then proceeded to moon with great strength…without you on board the train.

We have all been there, and the key is to take it as a price paid for your market tuition.

The talk of the town over the weekend is futures open interest being at all-time highs.

Today’s post is going to be an assessment of this setup, to contextualise how I see the current state of derivatives leverage across the Bitcoin market.

Become a Premium subscriber to access today’s Video Update (37 mins), Written Article and TL;DR Summary.

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Driving us all mad…

There have only been a handful of memorable instances in my Bitcoin career where the market has gone this dead quiet.

Volatility has compressed to such an extent, and the 30-day price range is a measly 5.6%. It is my experience that these conditions rarely last long, and extreme volatility squeezes like this often precede a resurgence of it.

Today’s post will analyse this volatility squeeze, and compare it to similar events in the past. These tend to occur in very late stage bears, but also in early bulls.

I’ll also spend time analysing the onchain supply setup, with a particular focus on cost basis levels that often converge around bear market lows. There is a tonne of coin now held around the 200-week moving average, and this $64k price zone is now the most important one we have seen in many years.

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If you’re a Bitcoin nerd like me, the resolution of the BIP110 chain-split that occurred over the weekend was fascinating to watch.

I’m not going to get into the politics of the soft fork itself. Instead, I want to focus on the fork logic and mechanics which led to this chain-split, and why the BIP110 chain has now stalled out with only two blocks mined.

Bitcoin doesn’t experience soft forks very often, and I believe this was an invaluable lesson in how the network resists proposals for change by default.

I’ll then follow up with a classic market update, which is long overdue given the events of recent weeks.

Given how much has happened, it’s frankly astounding how little has happened with respect to volatility and price.

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We had a great call today, covering key slides from our latest Bitcoin Monthly Report. Big thanks to all the attendees and those who raised their hands to participate in the session!

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As the dust settles after the terrible Coldcard incident this week, we can start to assess the impact this emergency coin migration has had on onchain datasets.

Aside from questions related to self-custody setups, by far the most common question I have received lately asks how onchain metrics have responded to this event, and whether interpretation will be skewed as a result.

This is a topic that often comes up, although it is usually centred on the impact that large custodians such as Exchanges and ETFs have on onchain data. For folks interested in that specific topic, I’d encourage a read of The Exchanges Are Running Out of Coins, which explores this in great detail.

Today’s post will document the size and scale of the change the Coldcard incident has had across network activity and onchain supply structure. By the end of this piece, I believe readers will have a renewed appreciation for how robust and resilient these tools can be, even during large-scale spending events like this one.

Upgrade to Paid to access today’s Video Update (38 mins), Written Article and TL;DR Summary.

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Note: This monthly report & upcoming conference call is exclusive to Checkonchain Orange subscribers - which is our upper-tier plan within Substack.

If you would like to learn more about Orange, or access a single monthly report + conference call recording, please click the button below.

Learn More About Orange Plan

Dear Orange Members,

Given the magnitude of chaotic events swirling around the Bitcoin market, it’s remarkable to see how little volatility has been inspired by it.

The largest public-facing entities (Strategy and the ETFs) have become net sellers of BTC, and confidence in self-custody has taken a hit with the Coldcard exploit. Through all of this, the Bitcoin price has barely flinched, and continues chopping wood around the 200-week moving average.

This month’s Orange report is titled Market Stasis, covering the following topics:

• The market and onchain impact of the Coldcard exploit and coin migration.

• Analysis of the time-pain capitulation across multiple market sectors.

• My current price and supply analysis of Bitcoin from an onchain lens.

• Update on Strategy’s balance sheet, MSTR issuance and preferred stock performance.

Orange Members will find the report PDF, and details of our upcoming monthly conference call below.

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As a Bitcoiner, I can’t recall an event that has shaken the industry in quite the same way as the Coldcard exploit that is still unfolding this week.

PSA: If you have any Bitcoin secured by a Coldcard hardware wallet, you may be at risk of losing your funds. Please read and action this post immediately.

Please also watch this WBD podcast with Rob Hamilton (who is a saint).

Over the last few days, I have tried to help as many people as I could step through the technical and even emotional journey of urgently migrating their cold storage. I have also unfortunately heard of some heartbreaking stories of folks who have lost funds. To those friends amongst us, I am truly sorry. We all are.

I know I have personally felt everything from fear, to sadness, to anger, and even a degree of guilt and embarrassment as the mess unfurled over the weekend.

I also know a great many of us in the Bitcoin space feel the same way.

There is an overwhelming sense of collective betrayal and grief that this shocking event leaves in its wake.

Today’s post is my attempt to reason through all of these emotions, with an objective to understand them better, and to bounce back quicker.

I’ll also try to reflect on some of the constructive outcomes and lessons that may arise from this event. The history of engineering is littered with catastrophic events, but our response to those events is precisely why much of the engineered world is so safe today.

Disclaimer: This article is general in nature and is for informational and entertainment purposes only, and it shall not be relied upon for any investment or financial decisions.

Full Video Version

An Emotional Roller-coaster

The only Bitcoin-related event where I was left with an equivalently large pit in my stomach was when FTX collapsed in Nov-2022. I was not an active customer of FTX, and I avoided this Coldcard exploit for a variety of factors.

Nevertheless, I can deeply empathise with the fear, and realisation that my life savings may have just been stolen out from under me.

What makes this particular exploit so gut-wrenching is that it has hit people who did everything right. They used a hardware wallet, kept their seed offline, didn’t leave their funds on exchanges, and stacked spot Bitcoin into cold storage.

They followed the not your keys, not your coins mantra, only to fall victim to an even deeper betrayal.

This has been how many of us have stacked a decent chunk of our life savings for several years. I had many moments of pause this weekend where I imagined all the years of hard work it took to earn those coins getting ripped away from me.

I feel betrayed.

I feel grief.

I even feel guilty.

I have experienced many powerful negative feelings over the last 48 hours, and I want to unpack a few of them in the hopes that it resonates with readers to contextualise similar feelings.

Betrayal

I have been an active user of Coldcard hardware for many years, including over the course of this weekend. It has been an integral part of my wallet setup for many years, and I would easily classify myself as a Coldcard power user.

What I liked the most about the device was the tools it provided, from dice rolls at seed generation, to passphrases, and the derivation of child seeds.

Whenever I provided a wedding gift of Bitcoin, I would use these tools since I knew the recipients were quite likely to lose the seed. I would be their Uncle Check just in case.

When a friend or family member asked me which hardware wallet to use, I always defaulted to Ledger first for the simplicity, but then to a Coldcard if they were semi-technical and were starting to go deeper down the Bitcoin rabbit hole.

Fortunately, those who ended up with a Coldcard on my direct advice also utilised the passphrase feature I suggested. We safely migrated their funds away as a result.

I’ve even been a soft proponent of Coinkite products, and many subscribers will recall me saying things like this routinely in videos:

• Eventually, these coins find a coldcard owned by a HODLer…

• The price is dead on $X according to my blockclock

• If this [unlikely event] happens, I’ll eat my coldcard

For this, I am deeply sorry.

I too trusted this device with my own, and my friends’ savings.

For many years, my Coldcard based custody setup has been a comforting anchor in the back of my mind. A tool that I trusted to look after a large chunk of my historical proof-of-work. The chain attached to that anchor has now snapped, and it is very uncomfortable.

I feel betrayed by something I trusted very deeply.

Everyone who has been directly or indirectly affected by this event is right to feel betrayed. That betrayal can absolutely be directed at Coinkite, but also towards the person who recommended the product, and even at the Bitcoin industry itself for not catching it sooner.

Betrayal is a very strong feeling, and it leaves us in a relatively vulnerable and uncertain state.

I am very proud to watch the tireless efforts of many raising awareness, providing support, and helping people navigate this stressful situation.

Once again, if you need help, please contact me, and I promise to do my very best to assist you (technically, emotionally or otherwise).

Guilt

There are many reasons people will be experiencing feelings of guilt across the industry, including myself.

In my case, I feel guilty over having been both a soft and hard proponent of the Coldcard for several years. I’ve both recommended it to a handful of friends, but also spoken about it positively and (usually) in passing on podcasts and my reports.

It’s important to recognise that there is a lot of nuance underlying this feeling. I come from a class of Bitcoiners who grew up in 2018-19, and I first learned about the Coldcard listening to Marty and Matt riffing on the Rabbit Hole Recap podcast.

The Coldcard seed generation back in 2019 was, in fact, cryptographically sound (this bug was introduced in March 2021).

At the time, I followed the advice to roll dice for additional entropy, and to use passphrases, but even if I hadn’t, my seed was ultimately generated in a sufficiently random way.

Further to this, the first Mk1 version of the Coldcard was released in Dec 2017 and had more Lindy effect in Bitcoin than I do. It has been around longer than I have, and in my specific circumstance it did what it was supposed to do.

That the firm was set to introduce a catastrophic bug in March 2021 is something nobody could have anticipated. Coinkite was a prolific sponsor of Bitcoin podcasts, and many people are currently dragging the hosts through the mud of shame this week as a result.

There is no defence for Coinkite’s actions.

I do feel very bad for the podcast hosts who were sponsored by them.

There is a degree of responsibility that comes with accepting sponsorships, and taking them was a business decision we at Checkonchain specifically rejected from day one. Podcast hosts who were sponsored by Coinkite must necessarily carry some degree of responsibility for that decision. With that said, I also feel that they, like I, could never have audited the code or anticipated this vulnerability.

Coldcard had a Lindy effect that pre-dated many of us. In the world of cryptography, that implies a level of resilience, which is often viewed as a stress test in its own right.

Coldcards were trusted because when we grew up, it used to be trustworthy.

Old-timers like me adopted the device when it actually did what it was supposed to do. Our basis of knowledge (and thus recommendation) was formed on an entirely different product than the one shipped with faulty firmware after March 2021.

Sponsored podcast hosts will be feeling a tremendous amount of guilt at this stage.

I also think we should recognise that many of us would have made the very same mistake if we were put into their shoes.

Reflection and responsibility must be taken. However, I’d suggest we please keep some of these historical and human elements in mind when judging the situation.

This is also the first time in my Bitcoin journey when I truly felt like a grizzled Bitcoin veteran. I’ve seen countless exchange hacks, crypto rug-pulls, lender bankruptcies, outright frauds, and wallet drains in my time. I have fortunately avoided almost all of them (I’ve lost a few coins here and there, but nothing substantial).

I still feel deeply saddened hearing the stories of people who have lost funds in this exploit. I cannot imagine how heartbreaking it must be to see years of hard work and savings lost this way.

The hard part is that this mess will be net a deflationary event for the number of Bitcoin holders, especially in self-custody:

• Folks who lost funds will struggle to trust Bitcoin in the future, and it’s a very tall order to start rebuilding your stack after something like this.

• People who recommended Coldcards will feel guilt and shame. I suspect many will be so jaded by this that they may back away from the industry entirely, and certainly won’t be recommending self-custody as readily.

• Self-custody has taken a major step back because even people who did everything right became victims. I can’t imagine the damage if this had occurred in a larger hardware wallet like Ledger or Trezor, it could very well have been end-times bad.

Even the people who have avoided this specific failure scenario realise that it could have been them, and that a major injustice has occurred. Hindsight shows that surviving multiple years in Bitcoin has not been easy.

The best we can do at this stage is actively make people aware of the exploit, and do our very best to help them migrate funds as quickly as possible. After that, we must reflect, learn the hard lessons, and start the process of rebuilding the trust which has been lost.

Grief

In my opinion, this is the most important emotional state that is rippling across the Bitcoin industry.

Collectively, we are currently experiencing a traumatic event.

I’d wager everyone reading this has gone through a very stressful couple of days, checking their wallet balance, fearful that they might be next. Having to make any changes to our cold storage setup is an ordeal in itself, let alone under urgent emergency circumstances.

Every single one of us can sympathise with folks who have lost their savings, and have perhaps imagined that state of mind for themselves too.

We’re feeling a collective sense of sadness and grief for the loss of others.

The result is that many people have stood up and offered their hand in help. Bitcoiners have rushed to the scene to help triage the situation with awareness campaigns, profiling the risks, and actively stepping people through fund migrations.

This event has even crossed existing social schisms, where folks who disliked each other just days ago are rallying to solve the immediate problem.

By way of example, I had a call with Danny Knowles this morning, and he mentioned that he put out this tweet elevating Rob Hamilton, PortlandHODL and Wicked Smart Bitcoin for their tireless efforts. All three are notable opponents of BIP110, and yet Danny said countless folks with ‘BIP110’ in their X handle are liking and retweeting it.

Even folks who vehemently disagreed on key issues three days ago realise the gravity of this situation, and are all hands on deck.

By the end of this horrible saga, I suspect we will all look around and realise there isn’t much worth bickering over in comparison to risks like this one.

It’s a little bit like Bitcoin’s ‘fourth turning’, where the already exhausted bear market sentiment takes a final crushing blow with a major break of trust. Afterwards, we don’t have the energy or desire to keep fighting, and instead want to focus on a more positive outlook.

SBF broke the back of trust in 2022.

Coinkite has followed suit in 2026.

The crisis phase of the fourth turning is eventually followed by the more stable ‘white picket fence’ era of the first turning.

Without a doubt, this event is a negative setback on many levels.

However, forest fires also make way for fresh grass to grow.

Lasting Lessons

One of my friends that I helped migrate at-risk funds works in the aviation industry, and he offered a sobering lens for this event.

Engineering is replete with similar examples. The disasters themselves are a tragedy for everyone involved. In the years that follow, the industry learns lessons and adapts so that similar failures do not happen again.

There are several areas where I believe we have an opportunity to create lasting constructive changes from this particular event:

• Thorough review of industry security: Naturally, the first lesson will be hardening the security of the entire industry. Frontier AI models have a role in both the attackers’ and the defenders’ toolkits, and this will only accelerate into the future.

• Self-custody stress test: Everyone who is aware of this exploit has double-checked their self-custody setup, and many will update or change how they hold their Bitcoin entirely. Robust multi-signature and multi-party custody will become the default self-custody recommendation. Others will migrate towards custody providers and ETFs, and for many people, this is in fact the better solution for them.

• Quantum resistance: In many ways, this Coldcard incident is a microcosm of what a genuine Q-day threat would look like. We are lucky that Coldcard was a small boutique piece of hardware that most in the wider crypto industry have never heard of. I believe even folks who are quantum sceptical will admit that long-term reliance on a single ECC signature scheme isn’t going to last hundreds of years. None of us wants to do this on a network-wide scale, and advancing quantum-resistant cryptography likely has fewer barriers now.

• A general ‘unsticking’ of Bitcoin development: Many have commented on the stagnation of Bitcoin development in recent years.

  • The Great Consensus Cleanup (BIP-54): This soft fork proposal is for a set of four well-known and documented bugs that exist in Bitcoin’s consensus code. Given the role that frontier AI models had in this exploit, our tolerance for retaining known security holes must be tightened, and this is one of many proposals that likely has an easier path to reaching rough consensus.

  • Renewed appreciation of covenants: Covenants are a technology that enables greater control over Bitcoin spending paths. A coin could have a spending restriction enforced such that it can only be spent to a destination address as a first hop (a middle ground held by the owner), or all spends are delayed by N blocks unless an override key is presented. In these instances, an attacker with the victim’s seed could not sweep an entire wallet, and the owner would have fail-safes in place to buy them time.

This list is far from comprehensive, but I think it illustrates a few areas where the Bitcoin industry will strengthen in the years ahead.

The darkest days we collectively experience are often the source of the hardest and most impactful lessons we learn.

Today, we are going through and reeling from this event, and there is still much triage work left to be done.

Tomorrow, we collectively start the hard work of ensuring something like this never ever happens again.

Concluding Thoughts

Bitcoin has taught all of us many powerful lessons.

Not only about how the world and financial markets operate, but about ourselves.

A wise man once said, ‘HODLing Bitcoin is very simple, but it sure isn’t easy’.

I know that we all feel that today.

For everyone who has been directly affected by this exploit, please know that we all feel tremendously heavy hearts for you, and we are sorry this has happened.

You’re not alone, and I think you’d struggle to find someone reading this who isn’t willing to help you at a moment’s notice.

From us at Checkonchain, our inbox is wide open, and we will make every effort possible to help however we can.

After we work through the triage phase of this mess, we move on to the rebuilding and restructuring of an industry that has been through failures of a similar magnitude many times before.

Bootstrapping a monetary network like Bitcoin has always had all odds stacked against it. Yet time after time, the people supporting it build back stronger and even more resilient.

Watching the industry band together, despite our differences, has been an incredible thing to watch play out.

We all have a role to play, and many hands make for lighter work.

I myself am also here to help anyone who needs it.

I’m proud of us, even in a very dark hour.

Thanks for reading,

James

G’day Folks,

The last two days have been uniquely challenging for many of us grizzled and tenured Bitcoiners.

News that an exploit has been found in the Coldcard, which many (including myself) consider to be the ‘gold standard’ hardware wallet, has resulted in some cold storage wallets being drained.

This strikes at the very heart of what makes Bitcoin so special: our ability to safely self-custody and secure our wealth without trusted third parties.

I’m going to get right into it, keep things short and concise, and will cover the following topics:

• Overview of the exploit and risk profile.

• Summary of possible near-term and long-term solutions to consider.

Disclaimer: This article is general in nature and is for informational and entertainment purposes only, and it shall not be relied upon for any investment or financial decisions.

Additionally, since this article also deals with the technical details of self-custody, all opinions expressed must be viewed as the author’s opinions only (not advice of any kind). Please take all precautions necessary to thoroughly understand the nuances of any hardware or software wallet systems you consider using.

TL;DR

Please read this post in full if you are a Coldcard user.

Coldcard Exploit Overview

At the highest level, this exploit relates to the degree of entropy (randomness) that was used when generating seed words on a Coldcard device after the March 2021 firmware.

It has been found that the random number generator was not random enough.

This means an attacker can now brute-force ‘recreate’ a list of all potential seed phrases that Coldcards with this firmware would have generated.

⚠️ ACTION: Anyone who generated their seed phrase using a Coldcard from March 2021 onwards should assume that their seed phrase is compromised and cooly and calmly prepare to migrate to a new wallet.

This exploit thus far appears limited to Coldcard products, and does not impact other hardware wallet vendors like Ledger, Trezor, Bitkey, etc.

Categorising The Risk Profile

The most important thing to think through first and foremost is that this exploit specifically affects the seed phrase at the time of generation. This exploit only affects seeds generated using a Coldcard that was running post March-2021 firmware.

If a seed was generated on a vulnerable Coldcard but was then ported into another device (Ledger, Trezor etc), that seed remains vulnerable, and coins must be migrated off it.

If I were to categorise the risk profile for Coldcard customers, it would be in three tiers.

🔴 High Risk: Critical to migrate your coins as soon as possible if ALL of the following are true.

• Generated seed on a Coldcard device after March 2021 (or you’re unsure of the date).

• Did not utilise the dice-roll feature with at least 50 rolls during seed generation (if you cannot remember doing this, assume you did not).

• Do not utilise an additional BIP-39 passphrase ontop to secure your coins.

⚠️ ACTION: If you fall into this category, your seed words should be considered vulnerable and at risk. You must migrate your coins to a new and safe wallet ASAP.

Please skip ahead to the Potential Solutions section for some ideas on near-term and long-term options.

🟠 Medium Risk: Your coins are secure for now, but you should still plan to migrate them as soon as possible.

Assuming you generated a seed on a Coldcard device after March 2021 but also:

• Added dice roll entropy at seed generation.

• You do use a BIP-39 passphrase.

• You have a multi-sig setup, but some keys are Coldcard generated.

In these instances, you essentially have one or more layers of defence. Attackers can get the pool of possible seeds, but they must then go through the process of brute-forcing your passphrase or trying to match up M of N multi-sig keys to get the descriptor.

⚠️ ACTION: If you fall into this category, you are not at immediate risk, but you should act assuming your Coldcard derived seed is vulnerable.

🟢 Low to No Risk: Your coins are secure from this exploit if any of the following are true:

• You did not generate your seed on a Coldcard device.

• You did generate your seed on a Coldcard device, but before March 2021.

  • One way to quickly check this is to see if your wallet has any transactions that pre-date March-2021. If so, you are not affected by this exploit as your seed was generated before this bug made its way into the Coldcard firmware.

• You use a multi-sig setup which does not use an affected Coldcard generated seed as one of the keys.

• Your coins are held on a custodian or within an ETF.

• You use a multi-party custody solution like Casa, Unchained, or The Bitcoin Adviser (just to name a few that come to mind).

Action: If you fall into this category, you are unaffected by this exploit. You should however take this as a critical reminder to review your self custody setup.

Potential Solutions

For folks in the 🔴 High or 🟠 Medium risk categories, there are a few near-term and long-term options that I would suggest you consider.

Critically, if you need to migrate your coins, time is of the essence, however you MUST be calm, patient, focused, and limit distractions. The last thing you want to do is make a human error because you acted in a stressed state.

Take a deep breath, get a pen and paper, and write down your next steps.

Near Term Immediate Options

In essence, you need to migrate your coins to a secure private key. This is an interim hop for your funds to mitigate the immediate risk profile.

These include, in order of security preference:

• Another hardware wallet (Ledger, Trezor, Bitkey etc) with a freshly generated seed phrase. This includes an existing wallet you know for sure is safe and secure.

• Generate a software wallet using a desktop application like Sparrow Wallet, or a mobile wallet using an application like Nunchuk, or Blockstream.

  • I’ll provide clear text links below.

• Transfer coins to a custodian or exchange you already have a relationship with.

• If the only option you have is the vulnerable Coldcard, you must generate a new wallet using a strong passphrase, and transfer the coins to that wallet. This moves you from the 🔴 High to the 🟠 Medium risk category.

  • Coinkite has issued instructions for this process here.

⚠️ ACTION: I strongly recommend doing all of this with a pen and paper handy to write down your steps before you do them. Write down every seed phrase, passphrase and other critical detail such that you do not forget it during a stressful period.

Download links for wallet software I suggest:

• Sparrow Wallet (Desktop): https://sparrowwallet.com/

• Nunchuk (Mobile): https://nunchuk.io/

• Blockstream (Desktop & Mobile): https://blockstream.com/app/

Long Term Options

Once your funds are in a secure interim location, take a breath, slow down, and relax. You have mitigated the immediate risk, and now you can thoughtfully plan out next steps.

Generally speaking, your next steps will require some research and thinking to design and ensure you find the correct solution for your needs.

This should include seed security, hardware device selection, thinking about inheritance planning, and reevaluating the pros and cons of any solution. There is no one size fits all, and everyone will have their own preference.

One thing that this event should teach us all is that single signature security is insufficient for storing meaningful wealth over the long term.

Some potential options, in order of simple to complex. All have trade-offs, and neither simplicity nor complexity directly translates to ‘better’:

• Utilising a custodian or ETF: This is the simplest approach, but does introduce direct third party risk. There may also be tax implications of converting BTC into an ETF. For some, this may end up being the better solution.

• Engaging a multi-party custody provider like Casa, Unchained or The Bitcoin Adviser (just to name ones top of mind). These services provide guided setup of a multi-sig wallet where keys are distributed both geographically and across multiple vendors. You still retain custody of your coins, but with the added security of professional assistance and distributed keys.

• Establishing your own multi-sig wallet setup. This is the most advanced approach, but the general best practice for individuals uses a:

  • 2-of-3 multi-sig setup where coins require any two of the three keys to sign in order to spend.

  • All three keys generated on different hardware wallet devices (i.e. a Ledger, Trezor and a patched non-vulnerable Coldcard).

  • Those three keys get distributed into three separate locations.

  • Importantly, this setup also requires the wallet descriptor that connects the three keys in order to recreate the wallet. This is most important for inheritance planning, as your loved ones will likely struggle to work out what to do with three seeds.

  • There are also new products like Frostsnap (https://frostsnap.com/) which are designed to be a simplified device multi-sig user experience.

There are no doubt other solutions available, however for brevity these three are the most likely options for the majority of people reading this.

Concluding Thoughts

This particular event really hits home in a very different way to most news items.

It is an event where an exploit in one of the most trusted hardware wallet providers has resulted in Bitcoiners losing their hard-earned cold storage Bitcoin.

This is one of the most stressful and saddening events I can recall in my Bitcoin history.

I myself have long been a Coldcard advocate, and I still believe their device is one of the best designs for me personally. I was fortunate in that my seed was generated in the years prior to this firmware, and I also utilised dice rolls, passphrases, and multi-device multi-sig.

I also know that most people did not, and will not do this.

If you have been affected by this exploit, I am so very sorry, it is a grief that we feel across the entire industry.

If you find yourself in any way shape or form unsure of what to do, please reach out to me via any channel (Substack DM is best).

The industry will learn from this event, and many will reevaluate their self-custody arrangement as a result, mitigating future issues.

There is much more to say on this topic, but to get this out ASAP, I will leave it there.

Please reach out if you have any issues, I am happy to assist however I can.

Thanks for reading,

James

A big thank you to our Premium subscribers for another great batch of questions this month!

In today’s Q&A, James and Alec discussed topics including:

• Is Bitcoin’s long-term thesis still intact?

• What does a post-2027 recovery look like?

• Can Bitcoin reach US$1M?

• Does global liquidity still drive Bitcoin?

• BIP-110, and chain split risks.

• The Clarity Act

• Are AI data centres changing Bitcoin mining?

• Is it time to thoughtfully use leverage?

We hope you enjoy the session.

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Markets have settled into one of those phases where every day feels much the same as the last.

Price hasn’t gone anywhere meaningful, volume continues to disappear, and both bulls and bears seem to be waiting for somebody else to make the first move.

Today’s update is a walkthrough of the charts I keep coming back to during periods like this, and what they suggest about the current state of the Bitcoin market.

When markets are this quiet, it's often the underlying behaviour that matters more than the price itself.

Upgrade to Paid to access today’s Video Update (27 mins) and TL;DR Summary.

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Welcome to the July edition of our Q&A, where Premium subscribers can ask (and upvote) questions about the Bitcoin market, onchain analysis, and broader macro themes. We will record and publish the Q&A session later this week!

🔍 How To Ask Your Question

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Earlier this week, we had a fantastic question dropped into our Subscriber chat, and it really got my onchain nerd gears turning.

The question was asking what the significance is of the Cointime Price and Realised Price almost intersecting around $52k.

• Does this tell us something about the role Long-Term Holders play in setting market floors?

• Does it indicate that Bitcoin has developed or lost monetary premium value?

• Can we expect bear markets to be defended at higher levels?

Today’s piece is going to help subscribers think about these questions, and analyse why the Long-Term Holder cohort is arguably the most important to study at the current stage of this bear market.

Disclaimer: This article is general in nature and is for informational and entertainment purposes only, and it shall not be relied upon for any investment or financial decisions.

📈 You can find the charts from our articles on the Checkonchain Charting Website, and a guide in our Charts Tutorial Video.

Reintroducing Cointime Price

There are a few key points that Ian addressed in his question, which I will paraphrase:

• Does Cointime Price crossing above Realised Price signal a more mature monetary phase for Bitcoin?

• Are recent buyers such as ETFs and Strategy becoming more important than dormant buyers from prior years?

• Does the implied change in coin activity suggest that a permanent repricing to higher levels has occurred in recent cycles?

In my opinion, the answers to these questions are Yes, Yes & No, and Yes.

I will also add, that my answer to those questions would remain the same no matter which part of Bitcoin’s history we were talking about.

Every market cycle, Bitcoin sees coins repriced to higher levels. We also see a maturing market landscape, with more people realising that Bitcoin is a sound asset which is here to stay.

Recent buyers are always more important than dormant supply, with the one exception being around market extremes (bull peaks and bear floors).

The reason the Realised Price reprices significantly higher every cycle is because dormant coins took profit, and a new buyer acquired them at higher prices.

The reason Cointime Price reprices significantly higher every cycle is because even top buyers eventually come around to respecting that much cheaper prices are likely now a relic of history.

We will return to explore these two price models later in the piece. For now, think about these two price models as follows:

• Realised Price: Onchain value weighted average cost basis per unit of BTC in the supply (every coin is included).

• Cointime Price: Onchain holding time and volume weighted average cost basis for the coins which refused to spend in both the bull and bear.

Coins Are Rocks

Many of you know that my background is in geotechnical engineering, which is anything to do with the ground (basements, tunnels, excavations, mines, etc).

As a Sydneysider in Australia, I have worked with my fair share of Hawkesbury Sandstone, which is a very beautiful, and very strong sedimentary rock. Sedimentary rocks are formed when layers of soil are deposited over one another by wind or water, with the lower layers being under more pressure than higher ones.

As the rock becomes exposed to the elements, the upper layers start to degrade from the effects of de-stressing, erosion and water pressure entering the cracks and joints that open up between sections of rock.

We can think about the dormancy of the Bitcoin supply in a very similar way.

• More recently moved coins are more likely to move again, and represent almost all of the daily trade volume and network activity.

• The older a coin is, the more likely it stays dormant. Coins from Bitcoin’s earlier years are rarely spent, and disproportionately come back to life during raging bull markets.

This chart shows the proportion of the ~20M circulating BTC based on the year when they last transacted. You can see how the 2009-2016 coins still represent around 18.2% of the BTC supply, but their proportional dominance decays over time (they are either spent into a new year, or ‘diluted’ by both those that are, and newly mined supply).

Modern supply (2023+) currently represents the lion’s share of the supply at 59.3%, whilst Bitcoin’s middle years (2017-22) are an additional 22.5%.

Whilst those coins from prior cycles represent a very meaningful chunk of the BTC supply, they were last moved at historically cheap USD realised prices.

Coins last moved before 2020 represent 27% of the BTC supply, but are less than 1% of the total realised capital invested in the network.

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The Bitcoin price has been edging higher in recent weeks, after recovering the 200-week moving average around $63k. The market did experience a weekly close below the 200WMA towards the end of of June, but has since held above it for four consecutive weeks.

Whilst the 200WMA is just a line on a chart, it is one that is widely observed by investors and traders, particularly those with more experience, and longer investing time-horizons.

Why this specific period of moving average became a common ‘deep value’ price model across numerous asset classes is a mystery of history and human behaviour. However, in the world of Bitcoin, we have a somewhat unique lens to visualise and model what investors do around that level.

In today’s post, I will explore how the Bitcoin supply structure has changed since hitting the 200WMA in early June. I’ll also analyse a series of momentum divergences which are well underway in developing under the market hood.

Become a Premium subscriber to access today’s Video Update (37 mins), Written Article and TL;DR Summary.

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The Bitcoin price is just chopping wood around the 200WMA, and it feels like absolutely nothing is happening.

Trade activity has fallen to cycle lows, long-term holders continue absorbing supply, and yet a handful of interesting divergences are quietly developing beneath the surface.

Today, I thought I’d jump into the set of charts I routinely pull up to get a big picture overview of market conditions, so you can see how my analysis gears spin.

Even amidst the chop, we can still divulge information regarding how investors and traders are behaving under the surface.

Become a Premium subscriber to access today’s Video Update and TL;DR Summary.

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Markets are complex and dynamic systems, and understanding them requires thinking in scenarios and probabilities.

It is impossible for us to know the future, although that certainly doesn’t prevent us from making an educated and informed guess.

When I analyse the Bitcoin market, I use a variety of datasets which represent sectors of market participants. Each sector (e.g. onchain, ETFs, or derivatives) tells us a story about what people are doing, and how they are behaving.

No model is perfect, and no analyst will ever predict the future correctly every time.

Over the last few months, I have read at least half a dozen bear market reports by analysts and firms which all paint a similar picture for Bitcoin in this bear. I see the same scenario painted all over X almost every time I take a peek at what’s happening on that side of the fence (which is increasingly infrequent these days).

The consensus view for Bitcoin appears to be that the bottom is far from in, and there’s a general expectation of a final low somewhere in the mid to low $40ks.

This scenario is not my base case view, and not what my analysis of the data suggests is the most likely setup. That said, I’m certainly not naive enough to pretend that my thesis is guaranteed to be correct. The market will clear wherever it wants to clear, and I need to remain open minded for alternative scenarios.

In this piece, I’m going to lay out my prevailing bear market thesis, and then challenge it with the scenario where the price of Bitcoin falls down to $45k.

Become a Premium subscriber to access today’s Video Update (33 mins), Written Article and TL;DR Summary.

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One of the most popular questions we received in our latest subscriber Q&A asked how high Bitcoin may run in the next bull market.

It is obviously impossible to answer this question with any accuracy, but that doesn’t mean we can’t make a reasonable effort to model it out, and indulge in a little speculation.

Today’s post is going to give us a break from the bear market, and instead run an analysis to punt on where the next Bitcoin cycle high may be.

One day, we will of course hit the price I identify in this piece, at which point I will drop the paywall and gloat on twitter saying ‘see, we called it!’.

Time to speculate on the number go up technology that Bitcoin is.

Become a Premium subscriber to access today’s Video Update (25 mins), Written Article and TL;DR Summary.

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We’re back with our monthly discussion between from and James about all things Bitcoin and macro.

In this conversation, James starts out with the key onchain and technical charts he is using to navigate this bear market. We analyse how our interpretation of onchain cohorts must evolve as the market cycle progresses and investor sentiment changes season.

Nik then explains why the strengthening US dollar, particularly against key Asian currencies, is coming increasingly to the foreground. Interest rates, oil prices, and equity market wobbles are on his radar, but the strength of the king dollar is what he believes should be commanding our attention right now.

Paid subscribers will find the discussion between Nik and James below.

Become a Premium subscriber to access today’s Video Update (1hr).

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Buy high and sell low, it’s age old wisdom that stands the test of time.

The higher the price you buy, and the lower the price when you sell, the larger the loss, and the better your overall net worth will be in the long-run.

The 2026 bear market has been so ruthless, that even the most Diamond handed dude Michael Saylor has sold 3,588 BTC at the basement bargain price of $60k.

All jokes aside, there is both rhyme and reason to what Strategy is doing, and the market has responded relatively well given ‘the only buyer’ has turned into a seller.

Makes you wonder, as all the critics have been saying that Saylor is the only dude who has been buying Bitcoin…if he’s now selling…who on earth is buying?

Upgrade below to access today’s Video Update (33 mins), Written Article and TL;DR Summary.

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Thanks to our Premium subscribers for another fantastic batch of questions this month!

In this Q&A session, James and Alec cover everything from bull market targets and cycle theory to Strategy, BIP-110, and where we think this market is headed, including:

• Next bull market upside from a $50–60k bottom

• Is the four-year cycle still intact?

• Does the data support a $40k BTC bottom?

• Is Strategy’s capitulation phase almost over?

• James’ view on BIP-110

• What would make us turn bullish?

• Where do we expect Bitcoin to bottom?

• Are long-term holders still selling?

• Are diminishing returns the new reality?

• James’ favourite research sources

We hope you enjoy the session,
James & Alec

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