Bitcoin’s Value Dips Amidst Record-Breaking Crypto Hack
Bitcoin experienced a roughly 4% decline a day after the largest cryptocurrency hack on record, a stark contrast to a similar incident in March 2018. At that time, a failed attack on the same exchange resulted in an almost 11% price drop within minutes, though Binance stated no funds were stolen.
Confirmation of the Attack and Scale of Theft
Binance has confirmed the attack that occurred yesterday. Chainalysis and TRM Labs estimate the value of the stolen assets at approximately $6.4 billion, more than four times the previous record heist of $1.5 billion on Bybit in February 2025. Bitcoin fell to around $76,400 on Friday, approximately 6% lower than its trading price following the Federal Reserve’s decision on Wednesday.
Leveraged Bets and Market Resilience
Over $1.3 billion in leveraged bets were liquidated, a process where trades made with borrowed funds are automatically closed by exchanges when prices move unfavorably. Despite this significant event, Bitcoin has remained relatively stable, considering the circumstances.
The 2018 Incident: A Different Landscape
The 2018 incident involved a phishing and theft attempt. Attackers compromised accounts, created API keys—credentials allowing trading bots to operate on an account—and used them to artificially inflate the price of the obscure coin Viacoin. Simultaneously, 31 accounts that had pre-deposited Viacoin sold off their holdings. Bitcoin plummeted from $10,740 to $9,690 in minutes and continued to fall to about $6,600 by April 5. However, it’s important to note that the market was already in a bear trend after peaking near $20,000 in December 2017.
Market Growth and Shifting Sentiment
To contextualize the current situation, the entire cryptocurrency market was valued at just over $400 billion in March 2018. Today, its worth is approximately $2.6 trillion.
A significant factor contributing to this growth and the diminished impact of panic on markets is the advent of U.S. spot Bitcoin ETFs. Investment vehicles like BlackRock’s iShares Bitcoin Trust enable individuals to purchase Bitcoin through conventional brokerage accounts. These funds now collectively hold around 1.3 million BTC, representing about 6% of the total supply.
Shareholders of these ETFs do not hold their coins on exchanges like Binance. Furthermore, sovereign wealth funds, including Mubadala and the Abu Dhabi Investment Council, have been active buyers. Data from Farside Investors indicates that BlackRock’s fund alone saw inflows of $136 million on Wednesday. These institutional investors are less prone to panic selling and often maintain their positions for extended periods.
The Timeline of the Theft and ETF Flows
The theft commenced at 4:05 p.m. ET on Thursday, after U.S. markets had closed. Consequently, the preliminary $17 million in ETF inflows recorded on Thursday occurred before the attack. Friday’s inflow figures will provide the first clear indication of whether ETF holders are beginning to sell their positions.
Unfrozen Assets and Attacker’s Holdings
The perpetrator still holds over 420,000 ETH and 18,270 BTC, valued at approximately $2.4 billion, assets that stablecoin issuers cannot freeze. This figure does not include other tokens, which would push the total holdings above $3 billion.
TRM and Chainalysis have linked this attack to the North Korean group responsible for the Bybit heist. Following that incident, the group converted about 84% of the stolen Ethereum into Bitcoin via Thorchain, a cross-chain swap network.
Binance’s Response and Market Indicators
Binance has stated it has set aside over $6.34 billion in company funds to cover all losses. The exchange is actively repurchasing the missing tokens on both the open market and through over-the-counter transactions. Approximately $3 billion has been frozen, while deposits are functioning normally, and withdrawals are expected to resume within 45 hours.
Market sentiment was already subdued before the theft and has weakened further. CoinMarketCap’s Fear and Greed index, a gauge of market sentiment ranging from 0 to 100, dropped to 36 points from 43, moving into “fear” territory from “neutral” the previous day. Bitcoin is currently trading about 38% below its record high of $126,080. In contrast, during the 2018 incident, the market was deep in “extreme fear” territory, with the index at 12 points when the event occurred. Traders were already in a state of panic, and the attack exacerbated an already dire situation.
Glassnode data indicates that long-term holders have unrealized losses on approximately 4 million coins purchased between $85,000 and $118,000. HashKey analyst Tim Sun had noted prior to the hack that the market’s primary challenge was “not panic selling, but rather insufficient new buying interest.”
Factors Mitigating Global Panic
In summary, a confluence of factors appears to have prevented a global panic despite the record-breaking hack. These include a more optimistic market outlook, significantly increased liquidity, active long-term investors, a clearer regulatory framework, enhanced security due to regulatory clarity, swift action by stablecoin providers, and a price trend towards recovery.
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