Coldcard Flaw, Coinbase Earnings & Fed Holds Rates | This Week in Crypto
Welcome to This Week in Crypto from K33 Research. Today is July thirty-first, twenty twenty-six. If you want to dive deeper into any of the topics we cover today, you’ll find all of our research at k33.com/research.
It has been another busy week for the crypto industry, even if Bitcoin itself barely moved. The Federal Reserve left interest rates unchanged, Coinbase delivered another strong quarter, regulators intensified their focus on prediction markets, and a serious security flaw was discovered in certain Coldcard hardware wallets. We’ll start there, because if you’re using one of the affected devices, this is something you shouldn’t ignore.
The biggest story this week is a vulnerability affecting some Coldcard hardware wallets. The issue wasn’t with Bitcoin itself. It was with the way certain wallet seeds were generated. In simple terms, some devices created wallet seeds using far less randomness than intended, making them significantly easier to reproduce than they should have been. If an attacker can recreate your seed phrase, they don’t need physical access to your hardware wallet. They can simply recreate your wallet elsewhere and move the funds. The vulnerability dates back to a software rewrite in twenty twenty-one and affects several Coldcard models running specific firmware versions. Updating the firmware is important, but it does not fix wallets that were already created using an affected version. If your wallet falls into that category, the recommendation is to generate an entirely new seed on patched or unaffected hardware and move your Bitcoin to new addresses. Simply restoring the same seed on another wallet does not solve the problem. One thing worth stressing is that this doesn’t undermine the security of hardware wallets as a category. It highlights how critical randomness is when creating a wallet in the first place. If the seed isn’t truly unpredictable, every security feature that comes afterwards becomes less valuable.
Elsewhere, Coinbase reported another strong quarter. At first glance, the market wasn’t impressed, with the stock falling around seven percent in after-hours trading. But underneath the headline, the business continues to become more diversified. Prediction markets more than doubled compared with the previous quarter, subscription and services revenue reached another record, and average U S D C balances on the platform climbed to twenty billion dollars. Perhaps the most important number was this: eighty-eight percent of Coinbase’s net revenue now comes from activities other than Bitcoin spot trading. That’s a remarkable transformation for a business that not long ago was largely dependent on trading volumes. The company also reported its fourteenth consecutive quarter of positive adjusted EBITDA. Prediction markets were in the spotlight for another reason as well. New York filed a lawsuit against Kalshi, arguing that the platform is operating an illegal gambling business, while the National Football League called for tighter rules governing sports prediction markets. The discussion is gradually shifting. It’s no longer about whether prediction markets have a future. It’s about who gets to regulate them and under what framework.
The week also brought the latest decision from the Federal Reserve. Interest rates were left unchanged, although three members voted in favor of another quarter-point increase. Inflation remains above target, geopolitical risks remain elevated, and policymakers continue to strike a cautious tone. For crypto markets, the outcome was broadly in line with expectations, leaving investors to continue searching for the next major catalyst.
Bitcoin has been unusually quiet lately, but the industry certainly hasn’t. This week was a good reminder that many of the developments shaping crypto happen away from the price chart. Security standards evolve after vulnerabilities are discovered. Exchanges continue changing how they generate revenue. And regulators keep defining the rules that the industry will operate under. Those stories rarely produce the biggest candle on the chart, but over time, they’re often the ones that matter most.
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