After weeks of indecision Bitcoin finally broke loose from the mid-$50,000 range. Unfortunately for those expecting a strong start to December, Bitcoin and the broader digital asset market went in to a freefall late Friday. The following are a some noteworthy events from the past few days which may have played a role in this activity.
Exchange hacks are nothing new to crypto. Over the years scores of thieves have absconded with literally billions of dollars. This past week showed that while digital assets have managed to make great strides over the years, security measures have simply not kept pace. Cumulatively, the following hacks equated to over $350,000,000 stolen in mere days.
Nearly $200,000,000 was stolen over the weekend as hackers were able to take advantage of what is described as a ‘hot wallet compromise’.
In this event, a mixture of tokens from over 20 different chains were stolen. PeckShield – the company which first discovered the theft – described the method as “Pretty straightforward: transfer-out, swap, and wash”.
While it is unlikely that BitMart is able to retrieve the majority of funds it lost, affected customers will thankfully not be on the hook for the theft. BitMart CEO, Sheldon Xia clarified this, stating, “BitMart will use our own funding to cover the incident and compensate affected users. We are also talking to multiple project teams to confirm the most reasonable solutions such as token swaps. No user assets will be harmed.”
A few days prior to BitMart experiencing the events described above, decentralized platform MonoX experienced a hack of its own totaling over $30,000,000.
In this instance, hackers were able to steal funds by taking advantage of an exploit within the MONO smart contract, allowing for token pricing to be manipulated/inflated. Once inflated, these tokens were then used to purchase others at regular pricing.
If two hacks in a week weren’t bad enough, BadgerDAO lost $120,000,000 of its own. As it stands, BadgerDAO indicates that it has hired Chainalysis to investigate and determine the cause of this theft.
In an effort to appeal to the thieves’ good nature, BadgerDAO has posted the following notice.
“To the Actor – You have taken funds that do not belong to you but we are willing to work with you and compensate you for identifying this vulnerability in the systems.
We are providing you with a direct line of communication to discuss a peaceful resolution without involving any outside parties. Contact us to discuss further and do the right thing on behalf of the community.”
While this might seem like a stretch, such an event occurred earlier this year when $600,000,000 in stolen funds were returned by a hacker after the exchange affected at the time posted a similar plea of its own.
Notably, this hack affected not only average investors, but large companies as well. Lending giant Celsius in particular lost more than $50,000,000 of its own.
Market Reaction and Metrics
While things weren’t overly rosy going in to the weekend, not many expected that crash that ensued. Within a one hour span, the price of Bitcoin managed to shed over $7000 in value, briefly touching the $45,000 marker.
With this recent activity, many traders have begun to demonstrate/experience fear towards where the market is heading next. As such, the popular ‘Fear and Greed Index’ has swung from Greed to Extreme Fear within a matters of weeks.
Despite this sharp decline, and change in sentiment, most analysts have agreed that Bitcoin still remains in a bull market – albeit perilously close to entering bear territory. As far as determining the direction which the market will go from here? No one truly knows.