Bitcoin Holds $65K as BTCPay Hack and BIP-110 Fear Test the Rebound

Bitcoin near $65K is holding, but one more security headline could break the rebound

Bitcoin is holding near $65K, but sentiment is still fragile. Bitcoin remains 233 days below its 200-day moving average, and CoinGecko said reclaiming that trend line still requires a 22% rally. For now, the market is caught between two live stress points: the actively exploited BTCPay vulnerability as an operational shock and the BIP-110 debate as a coordination shock.

Bulls have support, but the rebound still looks tentative

Bulls can point to one encouraging sign: after the Coldcard fallout, Bitcoin still advanced as the market settled down. Bears counter that the rebound is not clean while fear remains entrenched. That is the split investors need to watch. Buyers do not need perfect confidence to push price higher; they just need the next shock to fail.

Price may be stabilizing, but trust and liquidity pressures are still coming from infrastructure and protocol debates. If BTCPay is contained and BIP-110 stops draining market attention, the rebound can retest higher levels. If not, this looks more like a pause than a full reset.

BTCPay exposed tooling and credentials, not Bitcoin's base layer

The key point is operational, not protocol-level. BTCPay is payment-layer software, and the hack matters because it affects merchants, self-custody operators, and users relying on Lightning through exposed service software - not the Bitcoin base layer itself. Even so, markets can still punish BTC because traders quickly sell the trust damage when an exploit spreads.

What actually broke

BTCPay Server confirmed attackers are actively exploiting a critical vulnerability in versions prior to version 2.4.2. The flaw specifically exposed LND .macaroon credential files, which could be used to take control of an LND node and move funds. That is why the project told operators to update immediately or shut down servers until the patch could be applied. In plain terms, this was not a flaw in Bitcoin consensus or monetary policy; it was a weakness in software used to accept and route payments.

Why the fear is spreading

This incident hit harder because it landed on top of an already strained self-custody backdrop. The BTCPay shock arrived after the Coldcard exploit, which confirmed 1,719 BTC stolen with total losses likely above $130 million. That helped fuel the view that the attack surface is widening. A volunteer security audit also made that concern easier to understand: in just 24 hours, reviewers found nearly 5,000 vulnerabilities across almost 400 projects.

Why traders still sell Bitcoin

Markets rarely wait for a clean separation between ecosystem risk and protocol risk. When a payment processor, a hardware wallet, and Lightning-related tooling all flash warning signs in quick succession, traders tend to treat it as one risk cluster: rising crypto security risks for merchant infrastructure. That is the real pressure on price. Bitcoin itself did not lose credibility; confidence in the surrounding adoption stack did.

This is as much a liquidity and sentiment problem as a security one. If users and merchants see rapid patching and stabilization across the ecosystem, the exploit can be contained. If confidence does not recover at the same pace, Bitcoin can stay weak even after the vulnerability is patched.

BIP-110 may be a weak proposal, but the debate can still delay recovery

Another reason Bitcoin remains pinned under pressure is BIP-110. Even if it is not a game-changing proposal, it is still a coordination issue that can keep traders cautious.

Why a poorly supported softfork still matters

The mechanism matters because BIP-110 is framed as a softfork-style change. The critical point, though, is that even with only a sliver of miner support, the proposal's user-activated design means it can still keep moving toward and beyond its activation date. That is enough to keep the market focused on governance risk, not just technical debate.

That is why recovery may stay delayed. Traders are starting to ask whether Bitcoin is becoming more fragile politically as well as technically. If a contested rule change can keep gaining momentum without clear miner backing, future coordination events may affect liquidity before they make broader headlines. Bears have a point here: if governance starts to look noisy, buyers may demand a larger discount for that uncertainty.

What would ease the pressure

The bullish case improves if the debate loses momentum and mining support stays light. In that scenario, BIP-110 is mostly noise rather than a real brake on price.

If that coordination risk fades and demand still cannot push Bitcoin back toward the 200-day moving average, then the core problem is still weak demand. Until that changes, the market still looks more like a fragile hold than a confirmed rebound.