Bitcoin markets rally despite multiple negative news events — Digital Asset News analysis
Digital Asset News host analyzes why crypto markets are rising despite several negative developments including Strategy selling Bitcoin, the Coldcard hardware wallet security breach, and the stalling of the GENIUS Act in the Senate.
Summary
Crypto and equity markets are rallying on a day filled with negative news, a paradox the host sets out to explain. He covers Strategy's latest Bitcoin sale, the ongoing Coldcard hardware wallet security breach — now confirmed to have compromised even two- and three-word passphrases — and the apparent failure of the Clarity Act to advance before the Senate's August recess. He argues the rally is explained by a strong ISM manufacturing reading of 55.6%, well above forecasts, which signals economic expansion and overrides the negative crypto-specific headlines. He also raises physical security concerns for crypto holders, citing a rise in so-called wrench attacks, and shares his personal views on cold storage diversification, recommending custodial services, Tangem, and Ledger over Coldcard.
Key Takeaways
FULL TRANSCRIPT
Markets Rally Despite Negative Headlines
Host: We've got nothing but bad news and yet the markets — crypto and of course broader markets — are rallying. So the question is why, and what's going on?
Today things are looking quite interesting as we take a look at the markets. The S&P 500 right now is looking not too bad, up roughly almost a point and a half — looking pretty good. Digital assets themselves are also in a rally, almost 2% up in market cap over the last 24 hours. Bitcoin is up almost a percent, Ethereum barely, BNB, and so on and so forth. It's a pretty nice green day for the last 24 hours or so.
So the question you have to ask is: what's going on? We'll get to that in a second.
Dollar Cost Averaging Update
Host: I just want to remind everybody what I am doing personally. I am continuing to dollar cost average Bitcoin every Monday at roughly 6:30 in the morning — mountain time. When I wake up, usually around 4:30 or so, I take the dog for a walk, and the next thing I do is check the risk levels. I was pretty excited because the reading was below 0.3. When we dynamically DCA — if you don't know what I'm talking about, there's a link in the description — the difference between regular dollar cost averaging versus dynamic DCA is that as the price level goes down, I start to buy more. I refuse to make the same mistake I made in 2022 and 2018. I will continue to buy as the price goes down. As the price goes up, I will ladder and not do as much, but I will still continue to buy. I'm not going to be like Strategy and buying tops all the time.
Today was a pretty great day at a risk level of 0.29, below the 0.3 level. We picked up around $626. I think in the future, when Bitcoin is — name your price — I think we'll be rewarded, but anything can happen. Right now we are above that level at $63,775. So everybody's winning today.
Strategy Sells Again
Host: What is the negative news? Well, Strategy sells again. I've got no problems with Strategy selling — they're a business, that is fine. This just happened today, August 3rd. The average Bitcoin price they sold at was $63,957 — not too bad. $105 million worth. They still hold 842,138 Bitcoin.
As we take a look at this, we think, well, maybe that's not too bad. But Michael Saylor keeps reminding us that we should never sell our Bitcoin. I know there's a little bit of contentiousness as we talk about Saylor and the statement he made over and over again in different interviews — how they are the masters of hodlers. I said for a long time that makes no sense. If you're going to do this long term and you're saying, "I'm saving this for my kids and my grandkids, I don't care about ups and downs," that's fine. Nothing wrong with that. A lot of people are like that. But it's not for everybody.
I always disliked how Michael Saylor said never sell. Then recently he came out and said, "What I really meant was you don't sell at a loss." Well, thank you for that revision. But today, because of that, I think you reap what you sow. You sell, you sell — you've got to take the blowback. Some people say, "Well, that's just them." I have no problems with Strategy selling. What I had a problem with was saying you should never sell and then in the background going ahead and selling anyway. Rules for thee but not for me.
The Coldcard Hack — Passphrases Also Compromised
Host: We also talked about the Coldcard hack over the last couple of days. Watch Sunday's episode with Jerry from Costa Rica, and we also covered it on Friday. During that live stream, a couple of people said, "Well, why didn't they just use passphrases?" The passphrase would be the 25th word that you make up — it could be one word, it could be an actual phrase with spaces and everything else — and it makes things really safe. Well, bad news: not even the passphrase worked.
This is from Bitcoin Sessions — you can check out his channel. He says: "Important update. We just had our first confirmed loss of an MK3 — the version of the Coldcard — and a two-word passphrase, the 25th word. Drained at 2 p.m. August 2nd, Australia time, roughly 17 hours ago. Didn't help."
Then another person says: "I can confirm there was a three-word passphrase, and it was me."
So unfortunately there were hundreds of millions of dollars lost. You would think that with Michael Saylor selling and a cold storage device being compromised — which should never have happened — the price would go down. Just wait, there's more.
The Clarity Act Stalls in the Senate
Host: The Clarity Act is not going to pass. I don't think so — I could be wrong, but this is what we have. The Clarity Act is absent from Monday's Senate schedule, facing a critical 72-hour window before recess.
To catch you up to speed: the Senate is going on recess roughly on Friday, August 7th. Once they come back, we are in a midterm year and they are going to be campaigning — either for their own position or their party's position — because they want to take over the Senate and the House. And for the next presidential election, they want to put as much pressure on as possible and not give the Republicans any kind of win. That's just how politics are played. I just don't think they're going to come out and give a win to Donald Trump and the Republicans in a midterm year.
Monday's Senate schedule lists only a vote on a spending bill, with no action on the Clarity Act. If a cloture motion is filed on Wednesday, August 5th, the Senate could hold a procedural vote on whether to proceed with the bill as early as August 7th — but not a final passage vote. So things are getting very slim. Don't expect this to happen.
So on top of Michael Saylor selling, the Coldcard debacle, and the Clarity Act not passing — we're still up. Not too bad. And why is that?
The ISM Manufacturing Number Explains the Rally
Host: That's the ISM. You cannot dismiss the macroeconomics and the things going on around us. ISM manufacturing: the previous number was 53.3%, the forecast was 54%, and we came in at a whopping 55.6%. What the heck is this?
I'm not a big macro guy, so I'm going to make this as simple as I possibly can. This relates to Raoul Pal and his discussion about five-year cycles, not four-year cycles — and it's all about the ISM and the business cycle. I didn't think that was true, but he had a point when I took a look at it.
The ISM stands for the Institute for Supply Management, also known as the Purchasing Managers' Index, or PMI. It's a monthly survey of 300 US manufacturing companies — 300. It gauges manufacturing health in five areas: new orders, production, employment, deliveries, and inventories. Less than 50 is a contraction. More than 50 is an expansion. We came in at 55.6, so people are saying, "This is it. It's expanding. This is awesome."
But take a look at the historical picture. Since 1948, it has been a cycle of expansion and contraction. Going back to 2008 and the Great Recession, we were down much, much lower. However, we have been in an expansion for quite some time, and it's looking pretty good moving forward.
You're going to hear a lot about the ISM business cycle going forward. The reason the ISM business cycle was in contraction for so long relates to the maturity distribution of marketable interest-bearing public debt going from four years to five years. These are not my words — this is Raoul Pal — and you're going to hear a lot about this. It's not a four-year cycle, it's a five-year cycle. It's all about ISM and business cycles.
I asked ChatGPT: was the maturity distribution of marketable interest-bearing public debt extended to five years from four? It answered that reports from 2021 and 2022 suggested the average maturity of US marketable interest-bearing public debt was extended from four years to five years. So I then asked: prior to 2022, had this not been extended past four years? The answer was no — the average maturity of US marketable interest-bearing public debt has been extended past four years several times prior to 2022. Historical data shows this figure fluctuates considerably over time, peaking and troughing based on debt management policies and economic conditions.
So when we talk about PMI and the business cycle, it's looking good — that's fantastic. I just don't think we're going to rally massively in the next month or so. I still think we're going to go a little bit further down, but I could be wrong. I'm kind of hoping for it because of the dollar cost averaging. Don't be surprised if we start to drop even though we've got one economic indicator that is very positive and bullish.
Wrench Attacks on Crypto Holders Are Increasing
Host: One more thing — a little PSA. Don't get wrench attacked. This is from a friend of the show, Guy over at Coin Bureau. I have not seen it this bad.
Two French crypto millionaires were held hostage and tortured in a 52-hour kidnapping. The victims were beaten, burned, and forced to hand over $30,000 in crypto as captors demanded $150,000. First of all, I'm in Texas right now, and good luck with those wrench attacks here — everybody has a gun. But the thing is, the price tag is getting lower and lower. $30,000 to beat somebody up, burn them, and try to extort them. Is this going to happen to you? Probably not. Chances are you'd get hit by lightning faster than that. CertiK recorded 50-plus wrench attacks targeting crypto holders in the first half of 2026. I was blown away that the amount was this low. I guess people are getting desperate.
Cold Storage Strategy — Diversification and AI Defense
Host: So what does this all mean? We took a look at Coldcard. I talk about diversification of your investments, but also diversification in your cold storage. Somebody asked me: "Should I diversify into just any random amounts of storage?" Let's take a step back. If you wanted to diversify the storage of your assets — let's say it's 2020 and everything's going crazy — what if you could diversify your storage into a nice upstart called Voyager? Wouldn't work too well. But good news, you diversified and also put into Celsius. Okay. And the third one was a winner where you chose FTX.
So imagine that you did the right thing and diversified — just like the Coldcard people did. They did the right thing. They put assets in a cold storage device. They rolled the dice, made entropy, and everything was great until it got drained. So this is my personal opinion: I'm going to put assets in custodial services. I want to get into ETFs. And my choices for cold storage are Tangem and Ledger. People will say, "What about Trezor?" I don't use Trezor so I can't talk about it. Guy loves it over at Coin Bureau, just saying.
So I'm using custodial services I trust, and trust me when I say this — it is a pain to get your funds out. So if it's a pain for you, imagine how hard it is for the wrench attackers. Tangem is pretty good. Ledger is pretty good. I would still look at ETFs these days. People would say, "Well, that goes against the whole ethos of Bitcoin." Yeah, well, the whole ethos of Bitcoin should have really been thought about when all the Bitcoin maximalists were recommending Coldcard and it destroyed people.
I will say this about Tangem. They had a pretty good post — last week's Coldcard exploit is still reverberating, and CoinDesk asked hardware wallet makers to weigh in. They were interviewed, but they're still wrong. Tangem's still wrong. Ledger's still wrong. You know who's right about this one right now? I like the direction of Jack Mallers from Lightning, who just stepped down from 21. He said he's using AI agents to evaluate the code every 24 hours to make sure there are no bugs in it.
I said: look, Tangem, I like what you're doing, but AI is being used right now for brute force to get to those passphrases, and there's some kind of leak in the different upgrades — we talked about that on Sunday. They are using AI to brute force these things. So if you are a company doing cold storage, you have to fight fire with fire. You need to run AI daily. You need to make sure that the code is up to date. Don't trust — verify these things. And if they're going to take AI against you, you better use AI against them. That's where I'm at with this one.
Q&A
Host: All right, let's get into a little Q&A.
I think the bear market isn't over. I think we're close, though. Midterm years — we have until the first week of November before we vote on who's going to have the House. I'm not even sure if the Democrats can actually take over the Senate. But as far as the bear market being over, I'm hoping not. That's why I talk about it like this. I'm hoping to get somewhere below $60K, maybe a $55K buy every so often. That'd be nice. And maybe in two or three years, reap the rewards.
Kelby, Robbie — let's start up a fantasy football league. We should do that. It's coming time. Everybody who's been here through the last crappy bear market can all join, and then we put in some worthless meme coin. That'd be fun.
Somebody's asking about altcoins. What are you guys investing in? I'm going pretty heavy into Bitcoin, but at some point there are some outsized gains with altcoins. The question is which ones. I like Cantons. I like the real world asset part of it. I like Hyperliquid and what they're doing over there with perps. Solana is always not a bad one. Binance, Ethereum, Solana, Tron — that type of stuff. Is anybody buying a bunch of alts right now?
Cardano — hey, there was a big rally on that one. Cardano is at 19 cents, up 2.7% on the day and 22% for the week. Who would have thought? And someone mentioned ENA — up 4%, still almost in the top 50 at number 70. Have to take a look at that.
Somebody mentioned Chain Link — eight bucks right now. Not bad.
Somebody says they have a boatload of ADA. I bought it. I usually don't buy memes, but when I do, I lose everything. I am the most interesting investor in the world.
Fantasy coin — we should set something up for the fantasy football league. Let me have Claude set everything up and then we'll go from there.