Even though Binance suffered the biggest hack in the history of cryptocurrencies, confidence in Binance remained largely intact. BitcoinAccording to market analysts and researchers.
On Thursday, the world’s largest exchange by daily trading volume announced that approximately $6.3 billion was affected by the exploit. Security firm TRM Labs linked the security incident to North Korea.
This hack caused some selling Bitcoin. On Friday, the cryptocurrency traded at $77,065 around 1:34 p.m. ET, down about 4% on the day.
In comparison, tokens have fallen an average of 8.3% in the first 24 hours following past cryptocurrency exchange abuses, according to data from Anchorage Digital, an institutional cryptocurrency platform.
The digital asset remained relatively resilient because the Binance hack had nothing to do with the security of the Bitcoin network itself, said Sam Callahan, director of Bitcoin strategy and research at crypto treasury firm OrangerBTC.
“Investors recognize an important difference: Bitcoin itself has not been hacked,” Callahan told CNBC. “This is a security breach on a centralized exchange, not a failure of the Bitcoin network.”
Binance suffered the biggest hack in crypto history, but it’s not the only digital asset exchange to fall victim to bad actors, leading to Bitcoin’s collapse.
In the early 2010s, Bitcoin exchange Mt. Gox was hacked several times, wreaking havoc on the price of Bitcoin. According to data from Anchorage Digital, the token fell by 23.7% in the first 24 hours after the Mt. Gox attack in February 2014.
Most recently, cryptocurrency exchange Bybit suffered approximately $1.5 billion in losses due to an exploit targeting its trading platform. Last month, cryptocurrency platform Bitget leaked more than $350 million in digital assets.
What’s different about the Binance hack is that it hasn’t caused the kind of loss of confidence in the crypto market that has occurred after other major crypto security incidents, said Spencer Hallan, head of markets at crypto trading firm GSR.
Spencer Hallan, head of markets at crypto trading firm GSR, said Binance has begun recovering the affected assets, which likely allays some of investor concerns.
“Binance’s speed of response, deep financial resources, and assurances that users’ funds will not be lost have helped restore market confidence and prevent potential panic,” Haran told CNBC.
Tether, Circle, and several other crypto companies announced that they have frozen approximately $3 billion in funds stolen in the robbery. This should reduce the losses associated with an attack, the official said.
Binance also has a $1.2 billion safe haven fund for users to cover losses from security breaches and other events. If past history is any indication, the company could also qualify for financing that minimizes solvency risk, according to investment bank Compass Point.
“We believe Binance has sufficient liquidity to cover the hole and expect the exchange to remain solvent while refunding user funds,” Compass Point analyst Ed Engel said in a note to clients on Friday. “ByBit also received a bridging loan after last year’s $1.5 billion hack. Therefore, we believe Binance has financing options.”
GSR’s Haran noted that this recent rotation in technology stocks could also be partly responsible for the pressure on Bitcoin.
“Ever since the exploit, Bitcoin has traded largely in tandem with other risk assets such as stocks, which sold off overnight due to concerns about AI-related profits,” Hallan told CNBC.
of iShares AI Innovation and Tech Active ETF (BAI) It fell more than 8% on the day.
Still, David Rowant, head of research at Anchorage Digital, noted that current holders of Bitcoin are more likely to hold onto the token despite short-term headwinds than holders of other risk-on assets at this point.
According to data from Bitcoin analytics platform Bitbo, just 6% of Bitcoin is held in exchange-traded funds. This suggests that many bitcoins are still held by people who have long believed in the asset and its cypherpunk origins, Rawant said.
“Bitcoin and cryptocurrencies are not hot assets (like tech stocks) where investors run away and run away,” Rawant said. “The current holder base is pretty strong and allows us to take a slightly longer-term view of these things. That plays a big role in how well Bitcoin performs in this negative market environment.”
