The impact of the Binance hack is unlikely to last long

Market overview

The crypto market has fallen by 2.2% over the past 24 hours to $2.61T, having dipped to $2.57T at its lowest point, matching the lows seen on 16 September. The market is currently undergoing a crucial test of buyer sentiment. In theory, we could see a wave of sell-offs due to a reassessment of risks facing the sector. However, it is worth remembering that even the collapse of FTX at the end of 2022, an event on a larger scale than the recent Binance hack, dealt a short-lived blow, and the market stabilised within the following days.

Bitcoin fell below $76.5K early on Friday, hitting its lowest level in nearly 6 weeks amid the $6.3 billion Binance hack, the largest in history. Following reassuring comments from the exchange, the leading cryptocurrency rebounded to $78K, but external factors, such as sell-offs in big-tech shares and metals, are creating a negative backdrop, hindering any recovery. The technical picture also favours the bears, as the sell-off in BTC has intensified after a failed attempt to return to the 50-day MA. On the downside, the nearest support level appears to be $75K, from where a rebound occurred in the middle of last month. However, a slide down to $73.3K, near which the 200-day MA lies, cannot be ruled out.

The crypto market sentiment index fell 21 points over the day, plunging to 30. This sharp return to the ‘fear’ zone raises the question of whether the autumn surge in optimism was a trap for the bulls. In our view, this hack and big-tech sell-offs are simply an unfortunate coincidence that could have occurred at any time, regardless of the market cycle. We note that the market has quickly recovered, which we regard as an important sign of underlying strength. In terms of market activity, we expect the moderately negative trend to fade in the coming days, and the market to remain above the key 200-day moving averages of $73.3K for BTC and $2.48T for the total cryptocurrency market capitalisation. 

News background

According to Arkham, hackers withdrew approximately $6.3 billion from Binance in USDT, BTC, ETH, USDC, TRX, SOL and other cryptocurrencies. The exchange stated that it had managed to freeze approximately $3 billion of the funds withdrawn by unknown parties. Withdrawals from Binance and trading on Binance Alpha have been suspended.

The exchange stated that a preliminary investigation suggests that “the security incident may be linked to a compromised laptop belonging to a DevOps engineer, which allowed the attacker to gain access to the service container and carry out unauthorised fund withdrawals”.

Investment firm Bitwise has raised its Bitcoin forecast to $1.6 million by 2036. The updated model projects an average annual growth rate of 34.3%. Analysts attribute the rise in BTC price primarily to large-scale capital inflows.

Strategy’s shareholders have almost unanimously approved the switch to daily dividend payments on the preference shares STRC, STRF, STRK and STRD. The company stated that the reason for the changes to its dividend policy is that the rate at which Bitcoin is purchased depends on the issue volume and value of the securities.

Thirty-three major companies have banned the tokenisation of their shares on the OKX-ICE platform, created by crypto exchange OKX and Intercontinental Exchange (ICE), the owner of the New York Stock Exchange.

The Supreme Court of Thailand has recognised Bitcoin as property that may be subject to theft. The ruling was handed down in a robbery case in which the criminals forced the victim to transfer $50K worth of cryptocurrency to them.

Summary: The $6.3B Binance hack pushed the market down 2.2% to $2.61T and BTC below $76.5K. It recovered quickly; we expect the dip to fade as BTC holds above its 200-day MA at $73.3K.