Bitcoin opened August trading near $63,500, a level roughly 1% above the intraday low it touched on July 31. That stability capped a month in which the CoinDesk 20 gained 8.7% , the biggest monthly advance in about a year, tracking close to bitcoin's median July return of roughly 8.6% since 2013 . On that measure, July landed almost exactly on the seasonal schedule investors have come to expect.
The demand data underneath that number tells a different story. US spot bitcoin ETFs took in just $205 million in net inflows for the month, the lowest total on record according to SoSoValue data. Total ETF net assets stood at roughly $77.5 billion as of July 29 , about half their September 2025 peak near $151 billion, after May and June saw $2.43 billion and $4.51 billion in outflows, respectively. Bitcoin is still down about 26% for the year, from over $93,000 in January to the low $60,000s. A rally with this little institutional participation behind it rests on a narrower base than the monthly return suggests.
The options market turned defensive within a day
The catalyst for that shift in tone was the Federal Reserve. On July 29, the FOMC held its target rate at 3.50%-3.75% for the fifth consecutive meeting, voting 9-3, with Cleveland Fed president Beth Hammack, Minneapolis Fed president Neel Kashkari, and Dallas Fed president Lorie Logan dissenting in favor of a quarter-point hike — the widest split on record direction since September 2016. It was the first meeting under new chair Kevin Warsh, who told reporters he'd asked for "a good family fight" over policy and got one. Oil added to the pressure: Iran launched a missile barrage at US forces that Jordan's air defenses intercepted that morning, and Brent crude jumped more than 7% intraday to above $88 a barrel as fighting resumed near the Strait of Hormuz, complicating the Fed's read on inflation . The hawkish dissent undercut the decoupling from equities bitcoin had shown earlier in July.
Deribit's order book reflected the shift almost immediately. Heading into the July 31 monthly expiry, calls at the $70,000 and $72,000 strikes each carried about $2.5 billion in open interest, the largest positions on the exchange. About $9.6 billion in bitcoin options notional settled that morning, with a put/call ratio of 0.28 and max pain near $64,000, close to where spot was trading. Within a day of the Fed's decision, open interest in the $70,000 call had fallen to about $943 million and the $72,000 call to about $888 million, while the $60,000 put became Deribit's largest single strike at roughly $1.17 billion in notional. That figure does not forecast where bitcoin is headed. It shows how much capital traders are now willing to commit to protecting against a drop to that level, and a sustained break below $62,000 could move quickly toward that strike given how thin the order book has become. A recovery above $65,300 would put the $66,000-$68,000 range back in play.
A wallet flaw that keeps getting bigger
The other headline event of the week involved Coinkite's Coldcard hardware wallets , and the damage estimate has grown every day since it surfaced. CoinDesk first reported on July 31 that roughly 594 BTC, worth about $38 million, had been drained from around 500 wallets in a 25-minute window. Galaxy Research then mapped a larger pattern: 1,196 addresses affected, with about 1,082.65 BTC, worth over $70.2 million at the time, moved out over 41 minutes on July 30. Block engineer Clay Garrett subsequently found 695 more transactions matching the same signature, worth roughly another 488 BTC, pushing the potential combined total past 1,082 BTC. By August 1, Galaxy Research had raised its running estimate again, to 1,367.05 BTC across 4,585 addresses, worth about $88.6 million, and cautioned the figure could still climb. It did: a fourth wave began early Monday, August 3, and was still running as this went to press . This wave differs from the earlier three — the attacker is using bitcoin's replace-by-fee feature, meaning the transactions sit unconfirmed in the mempool for a window during which a victim who spots their own address can still outbid the attacker and move funds out first. If the pattern holds, Galaxy's running total across all four waves reaches roughly 1,816 BTC from more than 5,200 addresses, worth about $114 million — a figure the firm again cautions is preliminary and pattern-matched rather than confirmed.
The mechanism traces to a firmware update Coinkite shipped in March 2021, present in Coldcard Mk2 and Mk3 devices running versions 4.0.0 through 5.0.3. That update switched key generation from the device's hardware random number generator to a software fallback seeded from the chip's non-confidential serial number and internal clock readings, producing roughly 72 bits of entropy instead of the intended 128. An attacker who can narrow down a device's UID and approximate timer state can reconstruct candidate keys offline, without ever touching the wallet. Every compromised address held more than 0.15 BTC under a single signature, and many had sat untouched since 2021, meaning the flaw was exploitable for roughly five years before it was used at scale. Coinkite shipped emergency firmware on July 31 — 4.2.0 for Mk3, 5.6.0 for Mk4 and Mk5, and 1.5.0Q for Q — though updating firmware does not repair an already-compromised seed, and owners who set a BIP-39 passphrase or generated their seed manually rather than through the device's default flow were unaffected, a pattern that points to a specific population of default-configuration users rather than the whole product line.
What stands out is how little bitcoin's price moved. It was trading above $63,800 through the morning the theft was first reported, and the muted reaction reflects the theft's size next to bitcoin's roughly $1.3 trillion circulating market cap, even as the estimate has since grown. The flaw sits with one vendor's firmware, not with the bitcoin protocol, and the market has treated it that way throughout. Last week's real risk pricing happened in Fed policy and derivatives markets, not in the hardware wallet ecosystem.
Mining's difficulty drop looks structural, not desperate
One trend from the week cuts against the defensive mood elsewhere. Bitcoin's mining difficulty has fallen 19.9% since its all-time high above 156 trillion in November 2025, to 126.23 trillion at the July 25 adjustment, according to data tracked by Bitcoin Magazine Pro — the third-largest such decline since the ASIC era began, extending a slump of roughly 287 days. Network hashrate has dropped more than 12% from its late-2025 peak above one zettahash to around 868 exahashes per second. CoinShares has estimated that hashprice sat near $32 per petahash per day in late July, below the breakeven threshold for a meaningful share of older-generation fleets — which would normally read as a sign of miner distress.
Mining equities tell a different story. A basket of miner stocks rose 56% in early 2026 even as bitcoin fell 17% over the same stretch, a divergence explained by operators leasing spare power and site capacity to AI training and cloud clients — Hut 8, for one, signed a second 15-year lease for 352 megawatts at its Beacon Point campus in Texas on July 20 — instead of depending solely on block rewards. The market has started pricing these companies as energy infrastructure providers with AI-linked upside rather than as leveraged bets on bitcoin's price. If that reallocation continues, further difficulty declines may reflect miners redirecting power toward higher-margin hosting contracts rather than a wave of capitulation.
What August actually inherited
July closes as bitcoin's best month in about a year on a headline basis, almost exactly on the seasonal script investors expected. But it closes with ETFs posting their weakest month on record, options positioning that flipped from offense to defense within a day of a hawkish Fed decision, and a wallet exploit whose damage estimate has more than doubled since it first surfaced. None of that changes bitcoin's protocol security or its underlying market structure. It does mean the rally that just ended had less institutional weight behind it than the headline return suggests, heading into a September FOMC decision and a Jackson Hole appearance from Warsh that the market has already flagged as the next catalyst.
