The cryptocurrency market, rocked by a high-profile hack Friday morning, continued to be in hangover mode as the work week started. On Monday, a vast number of digital coins and tokens continued to lose value, some even at double-digit percentage rates.
Leading altcoin Ethereum (ETH -12.09%) — the token at the center of the hack — had fallen nearly 8% in value from 4 p.m. ET in late afternoon trading. Dogecoin (DOGE -14.32%) was acting like a bad doggie with a more than 11% drop, while utility cryptos Chainlink (LINK -15.38%) and Solana (SOL -16.05%) were down by roughly 11% and 12%, respectively.
A $1.5 billion problem
The hack that sent the market reeling was targeted at cryptocurrency exchange Bybit. Friday morning, the company reported that hackers lifted around $1.5 billion worth of tokens from a cold wallet that was used to store Ethereum token Ether. (A “cold” wallet is a crypto digital wallet stored offline; worryingly, this is often considered a relatively secure form of storage.)
According to some researchers, this heist was the worst in cryptocurrency history; it eclipsed the previous record holder by a factor of more than two. The leading suspect in the crime has been flagged by many crypto industry watchers as North Korean “threat actor” Lazarus Group.
Although Bybit said it fully replenished its reserves and managed to keep itself open for trading, the breach clearly rattled crypto investors. The resulting rout spread from Ether to a great many other altcoins.
Compounding that, speculation was rife that El Salvador had paused its daily Bitcoin purchases. On-chain data indicate that the nation, which made the leading coin legal tender in 2021, last made such a purchase last Monday, Feb. 17.
There has been no official statement from the El Salvador government on the matter. It’s likely connected to the country’s signing a $1.4 billion loan agreement with the International Monetary Fund earlier this year. Contingent upon the agreement was El Salvador making Bitcoin acceptance voluntary for the nation’s businesses; in January, its congress passed a bill codifying this into law.
Sense of security wanted
The Bybit hack is only the latest security breach that raises questions about the viability of crypto security. I wouldn’t be surprised if the market continues to be wary of coins and tokens in the coming days. That being said, I don’t think it’ll ultimately dissuade the many cryptocurrency bulls, who are no doubt ready to pounce when more positive crypto-affecting news hits the headlines.
Eric Volkman has positions in Bitcoin and Ethereum. The Motley Fool has positions in and recommends Bitcoin, Chainlink, Ethereum, and Solana. The Motley Fool has a disclosure policy.
