Bitcoin's market sentiment has plunged to its most negative level on record after a coordinated attack on Coldcard hardware wallets drained nearly 1,100 BTC — worth over $70 million — from about 1,200 compromised wallets. The incident, which exploited malicious firmware distributed during device setup, has shaken confidence in self-custody, a cornerstone of crypto's value proposition. Santiment's data shows the positive-to-negative commentary ratio dropped to just 0.58 bullish comments per bearish one, the lowest since the analytics firm began tracking.
Inside the firmware attack
Security researchers disclosed that attackers distributed compromised firmware capable of stealing wallet seed phrases during Coldcard device setup. Users who installed the malicious code unknowingly exposed their recovery phrases, allowing attackers to drain wallets after funds were deposited. All compromised transactions used identical 30sat/vB transaction fees — far above prevailing rates — suggesting an automated sweeping tool. The entire operation lasted just 41 minutes, and the attack occurred more than a day before Coldcard publicly warned customers about the threat.
Fear index hits new lows
Santiment noted that the current fear level has surpassed previous records, including the FTX collapse, the Mt. Gox incident, and COVID-19's 'Black Thursday' crash. The firm attributes the extreme fear to psychological factors: earlier crises involved centralized exchanges or macro events, while the Coldcard incident raises questions about the security of self-custody itself. “Even old wallets with a long history can have bugs, and nothing is 100% certain,” Binance's Changpeng Zhao commented, reflecting the broader unease.
Price action and broader context
Bitcoin's price slipped by a few thousand dollars in the days following the attack, but losses are largely attributed to other factors, including escalating Middle East tensions. The timing isn't great for a market already on edge. The Coldcard hack adds a new layer of anxiety, hitting at the very idea that holding your own keys is the safest option.
Industry reaction and next steps
Coldcard has yet to release a full post-mortem, and the investigation into how the firmware was distributed remains ongoing. Users are being urged to verify firmware signatures before installation and to double-check any recent setup procedures. The incident underscores a harsh reality: even the most trusted hardware wallets can be compromised if the supply chain is poisoned. For now, the crypto community is left waiting for answers — and watching whether sentiment can recover from this new low.
