The value of cryptocurrency stolen in hacks worldwide more than doubled in the first six months of 2024 compared to the same period last year, driven by a few large-scale attacks and increasing crypto prices, according to blockchain researchers at TRM Labs.

Surge in Crypto Theft

Hackers stole over $1.38 billion worth of cryptocurrency by June 24, 2024, compared to $657 million in the first half of 2023, TRM Labs reported. The median theft size was one-and-a-half times larger than the previous year.

Ari Redbord, global head of policy at TRM Labs, noted, “While we have not seen any fundamental changes in the security of the cryptocurrency ecosystem, we have seen a significant increase in the value of various tokens—from Bitcoin to ETH (Ether) and Solana—compared to the same time last year.”

Increased Motivation for Cybercriminals

Rising cryptocurrency prices have motivated cybercriminals to target crypto services more aggressively. The increased value of tokens means that successful hacks result in larger hauls for attackers.

Crypto prices have rebounded from their late 2022 lows following the collapse of Sam Bankman-Fried’s crypto exchange, FTX. Bitcoin hit an all-time high of $73,803.25 in March 2024.

Major Thefts

One of the largest crypto thefts this year was the $308 million worth of Bitcoin stolen from Japanese crypto exchange DMM Bitcoin. The company described the incident as an “unauthorized leak.”

Cryptocurrency companies are frequent targets for cyberattacks, but thefts of this scale remain relatively rare. In 2022, stolen cryptocurrency volumes were around $900 million, with a significant portion attributed to the over $600 million stolen from a blockchain network linked to the online game Axie Infinity. U.S. authorities have connected North Korean hackers to that theft.

North Korean Cyber Activities

The United Nations has accused North Korea of using cyberattacks to fund its nuclear and missile programs. North Korea has denied these allegations of hacking and cyberattacks.

Implications for the Crypto Industry

The significant increase in cryptocurrency thefts highlights the ongoing challenges the industry faces in securing digital assets. As the value of cryptocurrencies continues to rise, so does the incentive for cybercriminals to exploit vulnerabilities.

Conclusion

The first half of 2024 has seen a dramatic rise in cryptocurrency thefts, with hackers stealing more than double the amount taken in the same period last year. As the crypto market continues to evolve, the industry must remain vigilant and invest in robust security measures to protect against increasingly sophisticated cyber threats.

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Prices for major cryptocurrencies, as well as shares of Coinbase Global (NASDAQ:COIN) and MicroStrategy (NASDAQ:MSTR), slumped on Friday as the collapsed crypto exchange Mt. Gox began paying back creditors.

Nobuaki Kobayashi, the trustee for the Mt. Gox bankruptcy estate, announced that the estate has “made repayments in Bitcoin and Bitcoin Cash to some of the rehabilitation creditors through a part of the Designated Cryptocurrency Exchanges etc. in accordance with the Rehabilitation Plan.” He noted that other creditors would be “promptly” repaid once certain conditions were met, ensuring that payments could be made “safely and securely.”

Bitcoin and Ether Prices Drop

As of 10:45 a.m. ET Friday, Bitcoin (BTC) was trading around $55,700, down roughly 2.4%. Ether (ETH) was also down about 3.4%. The anticipation of the Mt. Gox news, which Kobayashi indicated last month would occur in July, had already begun to impact the crypto market. The latest announcement sent Bitcoin to its lowest level in five months.

Mt. Gox Hack and Its Aftermath

Mt. Gox was once the world’s largest crypto exchange, handling 70% of Bitcoin transactions at its peak. A hack in 2014, which resulted in the loss of an estimated 740,000 Bitcoin, led to the exchange’s collapse. The ongoing repayments to creditors have continued to create uncertainty in the market.

Impact on Coinbase and MicroStrategy

The repercussions of the Mt. Gox repayments have also been felt by Coinbase and MicroStrategy. Coinbase reported $935 million in revenue from customer crypto trading in the first quarter, double what it was in the fourth quarter. MicroStrategy disclosed in its first-quarter financial report that it owns 214,400 Bitcoin.

As of 10:45 a.m. ET Friday, Coinbase shares were down about 5% to $213.87, while MicroStrategy shares fell more than 6% to $1,220.11. Despite these declines, shares of Coinbase and MicroStrategy have surged about 23% and 93% year-to-date, respectively.

Market Reactions and Future Outlook

The anticipation and realization of the Mt. Gox repayments have created significant volatility in the crypto market. Investors are closely watching how the repayment process will unfold and its potential impact on Bitcoin and other cryptocurrencies. The continued distribution of the Mt. Gox estate could lead to further fluctuations in the market.

Conclusion

The Mt. Gox repayment process has significantly impacted the crypto market, causing a notable drop in Bitcoin and Ether prices. Shares of Coinbase and MicroStrategy also experienced declines amid the news. As the repayment process continues, market participants will be keenly observing the developments and their implications for the broader cryptocurrency landscape.

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Concerns that the Mt. Gox bankruptcy redemptions will drive down the price of Bitcoin (BTC) are largely unfounded, according to Presto Labs’ Head of Research. However, the scenario could be more bearish for Bitcoin Cash.

Market Impact Analysis

As Bitcoin’s price continues to dip below $60,000, the market has already seen over $200 million in liquidations as the trading day began in Asia on Thursday, CoinDesk reported. The former exchange, Mt. Gox, is set to return approximately $9.5 billion in BTC to its customers. Additionally, it will also distribute 143,000 BCH, valued around $73 million. With Bitcoin Cash’s daily trading volume at $308.8 million, this redemption constitutes roughly 24% of its daily trading volume, according to CoinGecko data.

Peter Chung of Presto Labs pointed out, “Our analysis shows that the selling pressure for BCH will be four times larger than for BTC: 24% of the daily trading value for BCH vs. 6% of the daily trading value for BTC.” Chung noted that BCH’s daily trading value is only 1/50th of BTC’s.

Selling Pressure on Bitcoin Cash

In an interview with CoinDesk, Chung explained that Bitcoin is expected to experience limited selling because those who wished to exit had already sold their claims on bankruptcy claim markets. “Weak-handed creditors had plenty of chances to exit over the last ten years on the back of aggressive bidding from the claim funds, so we can safely assume the current group of creditors consists of diamond-handed BTC bulls,” Chung said.

Chung suggests that creditors are likely to treat BCH as an “airdrop” and sell it immediately because Bitcoin Cash’s fork occurred three years after Mt. Gox’s bankruptcy. “Creditors are oblivious to BCH’s cause,” he continued.

Trading Strategies

Chung recommended a market-neutral trading strategy to handle this situation: “Long BTC perpetuals paired with short BCH perpetuals is the most efficient way to express this view, barring funding rate risk.” He added that those looking to secure a funding rate could explore other approaches, such as shorting term futures or borrowing BCH in the spot market.

Current Market Performance

According to CoinDesk Indices data, BCH is currently trading at $360, down 3.8%. The looming Mt. Gox redemptions and the potential selling pressure are key factors influencing its current performance.

Conclusion

While the Mt. Gox redemptions are not expected to significantly impact Bitcoin, Bitcoin Cash could face substantial selling pressure. This discrepancy is due to the higher relative impact of the redemptions on BCH’s trading volume compared to BTC. Traders are advised to consider market-neutral strategies to navigate this period of volatility.

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Fears of impending selling pressure from the defunct Mt. Gox exchange and potential miner sales pushed Bitcoin (BTC) under $59,000 on Thursday, marking its lowest level since late April. The anticipation of asset distributions from Mt. Gox, set to begin in July 2024, has contributed to the market’s anxiety.

Market Impact and Liquidations

Mt. Gox, which experienced a major hack in 2014, will start distributing assets to its clients next year. These repayments, made in Bitcoin (BTC) and Bitcoin Cash (BCH), are expected to exert significant selling pressure on both markets. In the past 24 hours, Bitcoin has lost 3.3%, according to CoinGecko data, with the sell-off starting shortly after the Tokyo equity markets opened.

Major cryptocurrencies also saw declines amid Bitcoin’s weakness. Ethereum (ETH) dropped 4%, while Solana (SOL) and Dogecoin (DOGE) fell as much as 8%. The broad-based CoinDesk 20 (CD20), which tracks the largest tokens, is down 4.8% in the past 24 hours.

Futures Market and Liquidations

Futures trades betting on higher prices saw significant liquidations, with over $230 million lost in the past 24 hours, according to CoinGlass data. BTC and ETH-tracked futures each experienced over $60 million in long liquidations, while products tracking DOGE, SOL, XRP, and PEPE recorded at least $4 million in losses.

These liquidations are the highest for long traders since late June. Binance  saw the most liquidations among crypto exchanges, totaling over $110 million. Liquidations occur when an exchange forcefully closes a trader’s leveraged position due to a partial or total loss of the initial margin. This happens when a trader cannot meet the margin requirements for a leveraged position, resulting in insufficient funds to keep the trade open.

Such data is useful for traders as it indicates leverage being effectively washed out from popular futures products, acting as a short-term signal of a decline in price volatility.

Market Outlook

Trading firm QCP Capital expressed a cautious outlook for the coming months. In a Thursday broadcast on Telegram, they stated, “We anticipate a subdued Q3 for BTC as the market remains uncertain around the supply from the Mt. Gox release.”

The looming distributions from Mt. Gox and ongoing miner sales are creating a cloud of uncertainty in the market. As Bitcoin and other major cryptocurrencies face this selling pressure, the market could see continued volatility and downward trends.

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Bitcoin (BTC-USD) slid to a two-month low on Thursday, extending a month-long decline as uncertainty over U.S. presidential elections and reports of bitcoin supply from the defunct Tokyo-based crypto exchange, Mt. Gox, weighed on the market.

Bitcoin fell more than 2% to $57,843, its lowest since May 2, and has lost more than 6% so far this week. The world’s largest cryptocurrency has been under pressure in recent months, with its slide accelerating this week following the first debate between U.S. presidential candidates Joe Biden and Donald Trump, which raised the possibility of Biden being replaced as a candidate.

“If he [Biden] is to be replaced, and there’s a lot of conversation going on around that, that person may not be pro-crypto,” said Josh Gilbert, a market analyst at digital brokerage eToro.

Bitcoin had a strong start to the year after the launch of exchange-traded funds (ETFs) in the U.S., propelling it to a record $73,803.25 in mid-March as investors poured in. However, the rally has fizzled, with bitcoin losing more than 21% since then.

A politically charged backdrop, with ongoing elections in France and Britain, is resulting in some risk reduction, analysts said, alongside the changing odds in the U.S. election campaign.

Mt. Gox Influence on Bitcoin Prices

Analysts also pointed to reports that Mt. Gox, the world’s leading exchange for cryptocurrencies before it went defunct in 2014, is repaying its creditors, which could be dragging bitcoin lower if those creditors offload their tokens.

“There is an anticipation that some of those original buyers of bitcoin will start to sell on the market, which is a fairly big chunk,” said Tony Sycamore, a market analyst at IG. Sycamore added that while this is a period of consolidation for the cryptocurrency after strong gains earlier this year, it could retest the March highs and probably push up towards $80,000.

Ether (ETH-USD), another major cryptocurrency, was trading more than 1% lower at $3,213.0, and is down more than 22% from its mid-March highs.

Political Uncertainty and Market Volatility

The uncertainty surrounding the U.S. presidential elections is a significant factor affecting the cryptocurrency market. The debate between Biden and Trump has added to the volatility, with investors concerned about potential policy changes that could impact the crypto sector. The possibility of a less crypto-friendly candidate replacing Biden has intensified these fears.

Market Outlook

Despite the recent downturn, some analysts remain optimistic about Bitcoin’s long-term prospects. The market is currently in a consolidation phase, which could be a precursor to another upward move. The anticipation of potential token sales from Mt. Gox creditors is a factor that needs to be monitored closely, as it could create additional selling pressure in the short term.

However, the underlying fundamentals of Bitcoin and other cryptocurrencies remain strong, with continued interest from institutional investors and ongoing developments in blockchain technology.

Conclusion

Bitcoin’s recent drop to a two-month low reflects the current uncertainty in the market, driven by political factors and potential large-scale token sales. While the short-term outlook is cautious, the long-term prospects for Bitcoin and the broader cryptocurrency market remain positive, with potential for significant gains once the current uncertainties are resolved.

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