Bitcoin: is it safe and effective?
Key Markets report for Tuesday, 4 August 2026
Last summer, Bitcoin was trading around $120,000 and to many, it seemed like the sky was the limit and the only sensible thing to do was to buy more Bitcoin, whatever its price because it was going to seven digits. I elicited many laughs from my bitcoin enthusiast friends at the time, as I was saying that I would I’d be buying bitcoin, but I preferred to wait for the price to correct back down to around $20,000. Today, that implicit prediction looks more credible. We can start with the technicals:
The picture is remarkably clear: bitcoin’s trend broke. A well defined head-and-shoulders reversal pattern (S-H-S) was completed in January this year when the price broke through the pattern’s “neckline” below $80,000, and we had a full 50% retracement from bitcoin’s $120k peak. It seems that the $60,000 level represents some kind of a psychological support/resistance barrier (see price action in 2021, 2022, 2024 and today), but if that’s breached conclusively, my $20k target could be on the horizon.
Incidentally: from the technical analysis viewpoint, today's bitcoin trade is exactly correct. We're sitting near a support level; downside could be limited and upside open, so a small long trade makes sense at this moment.
The narrative gloss is fading fast
By today, however, I’m not sure that I’d be buying bitcoin at any price. The reason is that the most compelling parts of the bitcoin story turned out not to be entirely true. First, we had some interesting revelations in the Epstein files, suggesting that bitcoin wasn’t entirely the creation of the anonymous genius, Satoshi Nakamoto and that Rothschild family employee Jeffrey Epstein donated hundreds of thousands of dollars to MIT Media Labs to launch their Digital Currency Initiative (DCI), described in correspondence as the “principal home and funding source” for bitcoin at the time.
The DCI used Epstein donations to support bitcoin core developers, including Gavin Andresen, Wladimir van der Laan and Cory Fields. Epstein’s contacts with Gavin Adresen go back at least to 2011. Apparently, the inspirational narrative about bitcoin’s sudden emergence omitted some relevant, but much less inspirational details.
Kidnappings of bitcoin holders
In January of this year, France imposed the requirement on crypto service providers to collect and make accessible the identities, addresses, and other information about their clients under the MiCA (Markets in Crypto-Assets Regulation) and related anti-money laundering rules. In addition, the EU’s DAC8 directive, also effective from January 2026, mandated crypto platforms to report client identities, tax numbers, and portfolio balances to tax authorities, creating centralized records of holders and holdings.
The almost immediate consequence of these changes was a wave of violent kidnappings and extortion attempts targeting cryptocurrency holders or their family members like spouses, parents, or children in France. By mid-April, at least 40 cases were reported. Later updates cited even higher totals such as 77 crypto-linked kidnapping/extortion incidents through the first half of 2026.
The extortion tactics included home invasions, street abductions, or holding victims captive under threats of violence or mutilation to increase pressure. The authorities mainly blamed youth gangs for this kidnappings. If true, we’d have to be impressed with these “youth gangs’” initiative, information access and organization to trace crypto account holders and their family members, kidnap them, and demand ransom in bitcoin. At any rate, this story blew up the part of bitcoin narrative about anonymity and security of owning bitcoins, and it gets worse from there…
LOL, we screwed them Iranians!
The next cold shower came on 29 May of this year, when US Treasury Secretary Scott Bessent spoke at the 2026 Reagan National Economic Forum in California and in subsequent media appearances, including an interview with Larry Kudlow on Fox Business. Bessent seemed quite pleased with himself speaking about the “Operation Economic Fury,” which involved going after the financial assets of the Iranian government and the IRGC.
Among other things, Bessent outright said that, “We have seized about a billion dollars of their crypto. … Just outright grabbed the wallets. Some of them may be typing in right now and might not realize that their wallet has been grabbed.” Well, in that, Bessent blew up the idea that bitcoin is safe from government seizure. If they can empty out IRGC’s bitcoin, they can empty out mine too, whenever they choose to do so.
Coldcard wallet raids
The most recent adverse development for bitcoin has been the flood of reported thefts of bitcoin from individuals’ “cold storage” wallets which, until only a few days ago were considered the most secure form of ownership of bitcoin. Reports of these raids started flooding the social media as recently as 29/30 July. Multiple coordinated attacks followed, and drained hundreds of wallets in a rapid succession.
According to the latest reports (dated 3 August), over $114 million has been looted from 4,500-5,200 accounts. It must have been “youth gangs” again. Apparently, the youth gangs targeted Coldcard hardware wallets made by Canadian company Coinkite which had a flaw in the way they generated seed phrases/private keys.
Whatever the case, it seems that holding bitcoin is a bit less convenient, anonymous and secure than originally thought, especially if the US government has you on the naughty list. Bitcoin holders should also beef up their personal, and family members security against youth gangs and be sure to double check their cold storage wallets for any potential security flaws. It would help if you are a software engineer and security expert. Apart from that, experts insist that owning bitcoin is entirely safe and effective.
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Today’s trading signals
With yesterday’s closing prices we have the following changes for the Key Markets portfolio:
