0
Cryptocurrency illustration. / Pexels

The cryptocurrency market has plunged amid allegations of a major hack at Binance, the world's largest cryptocurrency exchange. Bitcoin briefly fell to around $76,000 on Friday morning, while major altcoins, including Ethereum, XRP and Solana, also suffered sharp declines. Growing concerns over exchange security, coupled with forced liquidations of leveraged positions, appear to be intensifying selling pressure across the market.

According to U.S.-based cryptocurrency exchange Coinbase on Oct. 30, Bitcoin was trading at $77,000 as of 10 a.m., down 5.11% from the previous day. Ethereum fell 5.77% to $2,217 over the same period. XRP and Solana also declined 7.41% and 7.26% to $1.22 and $94.64, respectively. The simultaneous decline in Bitcoin and major altcoins indicates that selling pressure is spreading across the cryptocurrency market.

The immediate trigger for the decline was suspicion of a massive outflow of funds from Binance. According to cryptocurrency news outlet Unchained on Oct. 29 (local time), approximately $3.5 billion worth of cryptocurrency was reportedly transferred from Binance-linked hot wallets to a single newly created address. A hot wallet is a cryptocurrency wallet connected to the internet and used for activities such as customer deposits and withdrawals.

Binance said it was aware of reports concerning a potential security issue and had launched an investigation, while maintaining that customer funds were safe. A Binance representative said, "Our security team is urgently reviewing the relevant information, and we will provide updates through our official channels as soon as verified information becomes available."

However, Binance has yet to officially confirm whether a hack occurred or disclose the specific circumstances surrounding the incident. Binance founder Changpeng Zhao previously commented, "It does look like a hack on Binance."

Stablecoin issuers also moved quickly to respond. Tether and Circle reportedly froze assets held at suspicious addresses linked to the incident. However, the full amount of frozen assets has not been confirmed as actual customer losses. As the freezes were intended to prevent further transfers, additional verification is needed to determine whether a hack occurred and the extent of any damage.

Beyond the possibility of a wallet hack, the incident has raised broader concerns about confidence in major exchanges' custody practices and ability to meet their financial obligations. If fears of fund outflows from exchanges intensify, investors may seek to reduce their exposure by selling their holdings or transferring assets to external wallets.

Large-scale liquidations in the derivatives market are also being cited as a factor amplifying the decline. According to cryptocurrency news outlet BeInCrypto, citing data from CoinGlass, cryptocurrency liquidations totaled approximately $628 million in a single hour on Oct. 29. Around 97% of these involved long positions betting on price increases.

When investor sentiment deteriorates sharply amid security concerns involving a major exchange, as in this case, even small price movements can trigger cascading liquidations.

Experts have become more pessimistic about the short-term price outlook, although some remain positive about the medium- to long-term prospects.

With Bitcoin falling below the $77,000 level, previously regarded as a key support level, the possibility of further losses has increased. Now that Bitcoin has entered the $76,000 range, the key questions are whether buying interest will emerge at that level and whether the cryptocurrency can recover its former $77,000 support level.

Luke Deans, senior research associate at Bitwise Europe, previously identified the $72,000 to $77,000 range as a key price zone in an interview with cryptocurrency news outlet Decrypt. He suggested that the broader upward trend could remain intact even if Bitcoin fell into that range. However, with Bitcoin having broken below $77,000, investors now need to consider the possibility of a further correction toward $72,000.

Alex Thorn, head of firmwide research at Galaxy Digital, said in a Galaxy Research analysis released on Oct. 27 that the medium- to long-term outlook could remain positive, citing easing selling pressure from long-term holders and institutional demand for Bitcoin absorbing supply pressure.

However, he added that the bullish market structure could weaken if Bitcoin recorded a weekly close below $76,540 and failed to recover that level within a month.

                                                                                                                Kim Min-ju