Overnight headlines from Aug. 2 to Aug. 3 stretched across crypto security, whale flows, regulation, AI volatility and geopolitics, with the suspected Coldcard wallet incident staying near the center of market attention.
South Korea weighs emergency intervention powers for regulators
South Korean financial authorities are pushing revisions to the Capital Markets Act that would give regulators “emergency intervention powers” to take direct market-stabilization measures during periods of sharp stock-market volatility. The Financial Services Commission, or FSC, and the Financial Supervisory Service, or FSS, have already begun work on the legal changes.
The review is focused on single-stock leveraged ETFs, products that regulators believe amplified recent market swings during the stock sell-off. Proposed measures include adjusting leverage multiples and capping investment amounts to reduce risks tied to concentrated trading when markets become unstable.
Authorities are also considering personal investment caps for single-stock leveraged ETFs, with limits broadly set around 20% to curb excessive concentration of funds. Another proposal would introduce simulated trading systems designed to improve investor understanding of leveraged-product risk.
Regulators said raising minimum margin requirements mainly serves to increase the entry threshold, while investment caps function more like a ceiling on capital inflows. In their view, the two tools would work as complementary risk controls.
South Korea had already raised the minimum margin requirement for investors in single-stock leveraged ETFs from 10 million won to 30 million won starting July 31. Data showed that on the first day of the new rule, turnover in 16 related leveraged ETFs came in at about 3 trillion won, roughly one quarter of the previous trading day’s 12.4 trillion won. That was also about 80% below the 15 trillion won level seen on July 29.
Bybit market data also showed South Korea’s KOSPI extending losses to 5% in morning trade, with Samsung Electronics and SK Hynix both down 8%.
Iran rejects reports on reopening the Strait of Hormuz
Iran’s Fars News Agency, citing sources on Aug. 2, said reports of a plan to reopen the Strait of Hormuz were “pure rumor.” One source said no agreement had been reached on reopening the strait and called the reports baseless.
Another informed military source said the strait would remain closed as long as the United States continued hostile actions. Ships, the source said, could only pass through published routes and would need permission from the naval branch of Iran’s Islamic Revolutionary Guard Corps.
Earlier in the day, Israel’s Channel 12 had reported that Iranian Foreign Minister Araghchi had agreed overnight to a U.S.- and Qatar-backed proposal to reopen the Strait of Hormuz, and that the move had prompted U.S. President Donald Trump to cancel a planned strike on Iran.
Separately, a spokesperson for Iran’s Islamic Revolutionary Guard Corps said during an Aug. 2 briefing on “Victory-2” that a U.S. Amazon data-processing center in Bahrain had been selected as a target because it provided intelligence support, cloud-computing services and capabilities tied to U.S. military command systems. The spokesperson did not specify when the strike took place, but said it was part of Iran’s response to U.S. attacks.
Coldcard incident keeps expanding as small BTC transfers jump
Bitcoin activity in transfers below 1 BTC rose sharply as the suspected Coldcard wallet attack continued to unfold, pushing debate over self-custody security back to the front of the market.
CryptoQuant head of research Julio Moreno said data showed the amount of BTC moving on-chain in transfers below 1 BTC climbed Friday to its highest level since November 2022. About 39,600 BTC was moved that day, only around 300 BTC below the Nov. 16, 2022 record of 39,900 BTC set days after FTX filed for bankruptcy.
“Retail Bitcoiners (plebs) have not moved this much BTC in a single day since the FTX collapse,” Moreno said. He added that users taking action to manage risk should be read as a positive signal.
The spike came as the Coldcard case, first exposed in late July, remained under investigation and still appeared to be developing. It has also fueled fresh arguments over whether self-custody is actually the safer route for users.
Galaxy Research head Alex Thorn said the attack was still developing and that smaller actors and copycats had started targeting remaining Coldcard seed phrases.
Thorn said one depositor involved in the incident had been identified. Although the related funds had already been moved before they could be frozen on Duel, the platform had obtained the depositor’s identity. He also said the funds in that case did not belong to the three main attack waves Galaxy Research had previously identified as Wave 1, Wave 2 and Wave 3.
He later posted that a suspected fourth organized Coldcard attack wave was underway. Between blocks 960,778 and 960,792, he identified 218 transactions involving 462 victim addresses and 216 new destination addresses, totaling about 388.9 BTC. All of the accounts showed no input history before the Coldcard firmware boundary. Transaction frequency reached 13.8 per block, versus 0.3 per block in the pre-event control window, about 45 times higher. Some funds had already moved to second-hop addresses, similar transactions were still sitting in the mempool awaiting confirmation, and confirmed transactions showed RBF had been enabled. Thorn urged users to move funds out of Coldcard devices immediately and to use higher fees.
Bloomberg senior ETF analyst Eric Balchunas also weighed in, questioning whether a company with roughly five employees should be trusted with a role this important in Bitcoin storage.
Balchunas said the headcount behind Coldcard “seems insanely low.” He asked whether anyone would put their life savings into a bank with five employees headquartered in Canada. In traditional finance terms, he said, that would stand out as a clear warning sign.
He added that larger organizations such as Coinbase and Ledger may hold advantages in security spending and operational capacity, even if users face higher costs. He also said spot Bitcoin ETFs offer another route, allowing investors to rely on large, professional and regulated financial institutions while paying relatively low fees.
Stacks co-founder Muneeb Ali used the Coldcard episode to draw lessons in three areas: Bitcoin storage, quantum-computing risk and ecosystem security cooperation.
He said the incident was especially unfortunate because many affected users were low-risk, long-term Bitcoin holders who had avoided speculative investments, learned self-custody and treated BTC as a long-term store of value.
On storage, Ali argued that the better path going forward is diversification rather than concentrating all holdings in one setup. He suggested:
- 20% to 30% of BTC in ETFs such as BlackRock’s IBIT for professional custody and regulatory protection;
- 40% to 50% in multisig structures such as Casa’s three-key approach, with keys split across a security firm, mobile devices and hardware wallets;
- 20% to 30% in more advanced self-managed structures using different hardware wallets and different entropy sources.
On quantum computing, Ali said Bitcoin users may one day face a shock similar to seeing BTC suddenly leave a cold wallet once quantum systems break current cryptography. He said the threat is real and should be addressed early, especially as large language models accelerate scientific research.
On ecosystem development, he said parts of the Bitcoin community had become too closed over the past few years, limiting participation from top security researchers and firms. Many security specialists, he said, were not even familiar with Coldcard, and leading firms may never have fully audited its code. He called for broader cooperation, including with professional security firms such as Trail of Bits.
Ali also argued that the Bitcoin community should be more open to engineers from other crypto ecosystems. “When Bitcoin gets hurt, the whole industry gets hurt,” he said.
Bitcoin market structure and derivatives signals
Glassnode said annualized returns on Bitcoin’s three-month futures basis have remained below the yield on the U.S. two-year Treasury since February and have stayed there for months.
The firm said there has only been one historical stretch of similar duration, from August 2022 to January 2023, a period that ultimately aligned with the low of the previous market cycle. Glassnode added that persistently weak basis does not just reflect soft leverage demand. It also weighs directly on market depth and trading volume.
Market commentators said futures basis is often used to gauge risk appetite and demand from arbitrage capital. When the basis yield falls below the risk-free rate, the extra return investors get for taking futures risk becomes less attractive, which can reduce capital flowing into the futures market and hurt liquidity and trading activity.
Analyst “AntiFragile” said BTC order books still show strong buyer support, with a large amount of patient limit bids stacked 2% to 20% below the current price. Those orders, according to the post, have been in place since early June and represent passive demand positioned in advance. If BTC falls into those zones, the bids could cushion the move and damp volatility.
CryptoQuant analyst Darkfost said short-term holders sent more than 32,000 BTC to exchanges at a loss on Aug. 1, making it one of the largest loss-taking events in the last 30 days.
Strategy, Arthur Hayes and other whale movements
Strategy founder and executive chairman Michael Saylor posted another Bitcoin Tracker update. Based on previous patterns, Strategy often discloses changes in its Bitcoin holdings the day after such a post.
Separately, a wallet linked to Strategy moved 299.84 BTC about nine hours ago, worth roughly $18.91 million. Its previous BTC transfer took place between July 1 and July 5. During that same week, Strategy sold 3,588 BTC worth $216 million.
Arthur Hayes sent 2.5 million USDC each to Galaxy Digital and FalconX. He has already received 1,337 ETH from Galaxy Digital, worth about $2.5 million, while the FalconX leg is still being processed. That leaves another roughly $2.5 million pending.
Abraxas Capital deposited 61.19 million USDT to Bitfinex and also supplied 40,000 ETH, about $75.17 million, to Spark through the protocol’s Wrapped Token Gateway. The total value of the transactions was about $136.36 million.
Address 0x008…E295f withdrew 20,000 HYPE from Coinbase about one hour ago, worth $1.03 million. Since June 11, the address has withdrawn a total of 240,000 HYPE from exchanges, worth $15.88 million, at an average withdrawal price of $66.17.
Address 0x751…8a90A bought ETH again after a two-year gap. The address had previously built an ETH position in 2024 at $2,459 and sold near $3,159, booking a profit of about $700,000 in that swing trade. About half an hour ago, it reopened an ETH position by withdrawing 3,500 ETH from Binance, worth about $6.495 million, at a withdrawal price around $1,856.
Large token unlocks due next week
Token Unlocks data showed that PROVE, HYPE and ENA are all set for notable unlocks next week.
- Succinct (PROVE) will unlock about 208 million tokens at 11:00 p.m. Beijing time on Aug. 5, equal to about 104.17% of circulating supply and worth about $35.4 million.
- Hyperliquid (HYPE) will unlock about 433,000 tokens at 8:00 a.m. Beijing time on Aug. 6, equal to about 0.19% of circulating supply and worth about $22.67 million.
- Ethena (ENA) will unlock about 171 million tokens at 3:00 p.m. Beijing time on Aug. 5, equal to about 1.97% of circulating supply and worth about $15.1 million.
Crypto exchanges push a “reverse bridge” into Wall Street products
CoinGecko data showed that trading volume in traditional-asset perpetual contracts on crypto exchanges reached $1.32 trillion in the first five months of 2026, far above the $104.21 billion recorded in all of 2025. Monthly volume also climbed from $230 million in January 2025 to $347.17 billion in May 2026.
As crypto platforms bring exposure to stocks, indexes and commodities into perpetual products, the industry is developing what the report described as a “reverse bridge.” In the past, Wall Street entered crypto through ETFs, custody and funds. Now crypto exchanges are importing traditional financial assets into on-chain trading systems.
Coinbase and Binance are also building toward a “super exchange” model that would combine crypto, stocks, commodities and tokenized-asset trading. The report noted that stock perpetuals do not represent ownership of underlying shares. They are price-tracking derivatives, with no shareholder rights and none of the protections offered by traditional brokerages. Round-the-clock trading, global access and lower friction were cited as key reasons those products appeal to institutions and overseas retail traders.
AI drawdowns, policy questions and sector rotation
AI-linked stock weakness hit investment firm Situational Awareness in July, with the fund’s net asset value down 67% for the month. Founder and AI researcher Leopold Aschenbrenner told investors in a letter, “I let you all down this month,” acknowledging that July performance came in far below expectations.
The fund had drawn attention for its long-term AI growth thesis and its focus on AI infrastructure, AI chips and related technology companies. But a sharp July correction in AI names and selling pressure on high-valuation tech stocks dragged performance lower.
Aschenbrenner had previously gained prominence for his report “Situational Awareness: The Decade Ahead,” which examined AI capability gains, industry competition and AI safety over the coming decade.
Benchmark partner Chetan Puttagunta wrote on X that Anthropic’s public call for tighter regulation of AI model distillation was confusing. He said Anthropic, described in the post as a company valued at about $1 trillion with major technical and financial resources, should in theory be able to identify and trace “large-scale distillation attacks” if they are occurring at the scale the company describes. If Anthropic wants to curb the activity, he argued, the real cost may not be technical limits but the willingness to give up part of its API revenue. “The only cost seems to be less API revenue,” he wrote.
The debate comes as AI companies including Anthropic continue to focus on distillation, the practice of training one model with outputs from another model to cut costs and improve efficiency. Puttagunta’s framing was that the dispute is fundamentally about balancing commercial interests, open competition and intellectual-property protection.
Morgan Stanley China chief economist Xing Ziqiang said in a recent media briefing that the recent swings in AI assets do not reflect a deterioration in fundamentals. He attributed the move to crowded trades, funding absorption from large-cap raises and oil-driven rate-hike expectations moving together. In his view, AI investing has entered a mid-cycle pause, with focus shifting away from upstream compute and chips toward AI applications and HALO resource support, including energy, storage and raw materials.
The “AI Morning Brief” section also said Polymarket data showed YouTube had taken down 130,000 AI-generated-content channels involving 737,500 views, describing it as a rare large-scale cleanup of AI-generated material on the platform.
Separately, according to Titanium Media’s morning report, Amazon has confirmed completion of a total $50 billion investment in OpenAI, described as one of the largest single investments in the AI sector so far.
CLARITY Act loses time before Senate recess
The U.S. Senate’s Monday agenda did not include a vote related to the CLARITY Act. Instead, it only listed a procedural vote on continuing resolution bill H.R.6500. The Senate is scheduled to enter recess on Aug. 10, leaving roughly a 72-hour window for the bill to advance.
Under Senate Rule XXII, a cloture motion requires 16 signatures. In normal procedure, the cloture vote takes place one hour after the Senate convenes on the next working day. Cloture on a motion to proceed typically requires approval from three-fifths of duly chosen and sworn senators. If all 100 seats are filled, that usually means 60 votes.
On that timetable, if a motion were filed on Aug. 5 and the Senate met on Aug. 7, a cloture vote could happen on Aug. 7. That vote would only end debate on the motion to proceed. It would not amount to passage of the CLARITY Act itself. If cloture is invoked, Rule XXII still allows up to 30 hours of debate on the motion before a vote on proceeding. The bill would then still need to be considered and passed. The report added that the Senate could move faster through a bipartisan petition or unanimous consent, but progress would still need to come before the Aug. 10 recess.