We need to have a serious talk about bitcoin

Something feels deeply off in crypto right now. It’s not just prices drifting lower or another ugly headline. It’s the growing sense that even people who tried to do everything “right” are still getting burned. If you’ve been around this space for a while, it’s hard to shake the feeling that we’re living through one of the worst sentiment periods bitcoin and crypto have ever seen.

How we got here: from FTX to hardware wallet exploits

Over the last six years, crypto has been hit by a series of major blows. The 2020 crash set the tone, but the real damage to trust came later. Terra Luna imploded, taking Celsius and Three Arrows Capital down with it. Not long after, FTX collapsed—an exchange so mainstream it had its name on a major US sports arena.

For many people, FTX was the moment they realized that even the biggest, most visible brands in crypto could fail overnight. The standard advice that followed was simple: don’t trust exchanges, self-custody your coins, and use reputable hardware wallets.

Now even that narrative has been shaken by the Coldcard hardware wallet exploit, where tens of millions of dollars’ worth of bitcoin have reportedly been drained from wallets that were supposed to be among the safest options available.

What went wrong with Coldcard

The core issue behind the Coldcard incident appears to be a flaw in its random number generation—something most users never think about, but which is absolutely critical to security. A hardware wallet needs strong randomness to generate private keys that can’t be guessed or reproduced. If the random number generator (RNG) is weak or flawed, attackers can potentially derive those keys and empty wallets.

In this case, Coldcard originally used open-source code from Trezor. Later, licensing changes pushed the project to remove and replace that code. During that process, a vulnerability was introduced into the RNG. Because the new code wasn’t easily reusable by others (due to licensing), there was less economic incentive for third parties to audit it deeply. The flaw went unnoticed for years.

The result? Long-time holders who kept their coins off exchanges, used hardware wallets, and followed all the usual security advice still woke up to drained balances. These weren’t reckless traders chasing yield; they were exactly the kind of careful users the industry says it wants.

Why this trust crisis feels different

Exchange hacks and collapses are sadly nothing new in crypto. From Mt. Gox to FTX, the lesson has always been: “Not your keys, not your coins.” The answer was self-custody—preferably on a hardware wallet.

The Coldcard exploit cuts deeper because it attacks that last line of defense. If even a hardware wallet can silently fail you years after you bought it, what are newcomers supposed to trust? It’s one thing to say, “Don’t leave your coins on shady exchanges.” It’s another to admit, “Even if you buy a respected hardware wallet, there’s still a non-trivial chance something goes wrong.”

That’s not a comforting message for someone thinking about putting their life savings into bitcoin for the first time. It also flips a lot of long-standing assumptions. For years, the narrative was:

• Exchanges = risky
• Hardware wallets = safe
• Buy and hold = low risk
• Active trading = high risk

Now, reality looks messier. In some scenarios, keeping coins on a major, regulated exchange like Coinbase has so far looked safer than using certain hardware wallets. And with smart risk management, active trading can sometimes feel more controllable than blindly buying and holding on infrastructure you can’t fully evaluate.

Altcoins: five years without new highs

While bitcoin’s security narrative is under pressure, altcoins have their own problem: performance. Outside of a few exceptions like Solana briefly tagging a new all-time high in early 2025, the vast majority of altcoins have not set new highs since 2021.

For many top altcoins, that means five years of underperformance. Entire cycles have come and gone without recovering previous peaks. Traders who once used altcoins as a way to multiply gains and rotate profits into bitcoin are now far more cautious. The idea that you can reliably “ride alts up, then move into BTC” looks much weaker when 90%+ of the market hasn’t reclaimed old highs.

This long, grinding underperformance is a huge drag on sentiment. It’s not just one crash; it’s years of disappointment, bags that never recover, and communities that slowly fade away.

Bitcoin’s technicals vs. the mood on the ground

Ironically, some of bitcoin’s technical signals don’t look that bad. On higher timeframes, the monthly chart suggests that risk for long-term buyers may be lower than it was at the top, while potential upside over the next cycle could be significant. From a pure risk–reward perspective, being long bitcoin here may make more sense than trying to short it.

Yet the mood on the ground doesn’t match that. Between quantum computing fears, regulatory uncertainty, and constant security headlines, it’s easy to find reasons to be bearish or simply exhausted. New retail interest is minimal. Even long-time holders are questioning their assumptions.

This disconnect—constructive technicals, but crushing sentiment—is something we’ve covered before when looking at why lower prices can still be bullish while hidden risks pile up. It’s also part of the argument that, despite everything, bitcoin may have already won in the long run, even if the journey is brutal.

Is now a good time for newcomers to enter?

Here’s the uncomfortable truth: even if current prices end up being a great long-term buying opportunity, this may not be the best moment to push friends and family into crypto.

On one hand, valuations for bitcoin look relatively attractive compared to previous cycle tops. On the other, the infrastructure, user experience, and trust layer still have serious issues. It’s hard to look someone in the eye and say, “Yes, you should definitely jump in right now,” when:

• Major exchanges have collapsed in recent memory
• Hardware wallets can have hidden vulnerabilities
• Altcoins have been stuck below their highs for half a decade
• The learning curve for doing self-custody safely is still steep

For many people, the healthiest approach is to let them come to their own conclusions. If they become curious, they can start small, learn the basics, and only risk what they can afford to lose. Aggressively trying to convince skeptics to join the market in its current state is likely to backfire.

Rethinking “safe” in crypto

Crypto has always carried risk, but the last few years have forced a reevaluation of what “safe” really means. A few takeaways are becoming clearer:

1. Nothing is 100% safe

No wallet, exchange, or protocol can honestly claim to be perfectly secure. Bugs happen. Human mistakes happen. Regulations change. Even the most battle-tested products can have edge-case vulnerabilities.

That doesn’t mean everything is equally risky, but it does mean we should retire the idea of any solution being “foolproof.” The goal is to manage risk, not eliminate it.

2. Reputation helps, but it isn’t everything

Choosing products with long track records and strong reputations—like established hardware wallets or large, regulated exchanges—still makes sense. Many long-time users have avoided losses simply by sticking to a small set of well-known tools and not chasing every new thing.

But reputation isn’t a guarantee. FTX had celebrity endorsements and a stadium. Coldcard had strong advocates in the security community. In both cases, users paid the price when deeper issues surfaced.

3. Self-custody needs to evolve

Self-custody remains a core value of bitcoin, but the way we do it needs to mature. Options like multi-signature setups, diversified storage (not putting everything on a single device), and better education around backups and key management can reduce single points of failure.

At the same time, the industry needs to build tools that are both safer and easier for normal people to use. Right now, the gap between “do nothing and trust an exchange” and “be your own bank perfectly” is too wide for most newcomers.

Why this might still be a bottoming phase

As bleak as things feel, extreme negativity is often where major bottoms form. When:

• Long-time holders are demoralized
• New users are scared to enter
• Altcoins have gone years without new highs
• Even core infrastructure is under attack

…you’re usually closer to the end of a bear market than the beginning. There may still be more pain ahead—more hacks, more collapses, more regulatory battles—but historically, the best opportunities have appeared when sentiment was at its worst, not when everyone was euphoric.

None of this guarantees that prices will go up tomorrow, next month, or even in six months. But if you zoom out, bitcoin has survived multiple cycles of frauds, failures, and fear. Each time, the narrative evolves, the weak points are exposed, and the ecosystem slowly hardens.

Where we really are right now

Crypto today is bigger in awareness than it was five or ten years ago, but in many ways it feels smaller. Fewer new participants, less excitement, more caution. The space is shrinking back to its core believers while the rest of the world watches from a distance, unconvinced.

That’s not necessarily a bad thing for long-term builders and patient investors. It forces hard questions about security, user experience, and ethics. It exposes laziness and shortcuts in product design. It reminds everyone that this industry is still young and far from finished.

If you’ve lost money in an exploit or collapse, none of this theory makes the pain go away. You didn’t deserve it, especially if you tried to follow best practices. But your experience is also a brutal reminder of where crypto really is in its lifecycle: powerful, promising, and still dangerously immature.

For now, the only honest stance is a sober one. Bitcoin may still have enormous upside. The current environment may turn out to be an incredible entry point. But trust has to be earned again—through better tools, better incentives, and a lot less complacency than we’ve seen over the last cycle.