Why Is the Crypto Market Swaying?

The week starts in the red—it’s a bloodbath for crypto. Ethereum, Solana, and the market are plunging. Even Bitcoin isn’t spared.

The discord hack

The market has lightened by $400 billion since last Friday. Bitcoin has fallen back below $90,000, at its lowest since November.

It’s the hacking of $1.4 billion from the exchange platform Bybit on February 21 that triggered hostilities. This is the largest hack in history. It accounts for 16% of all hacks in the past fifteen years.

Analysts estimate that the North Korean hacker group Lazarus is behind this theft of nearly 500,000 ETH. Their strategy is to exchange these ETH for bitcoins, notably via the platform eXch which refused to freeze these funds belonging to Bybit. The Bybit hacker performs 2 to 3 transactions per minute and stops every 45 minutes for a 15-minute break according to Arkham.

The Ethereum has collapsed by more than 16% since the hack, despite Bybit’s decision to buy back the lost ETH from the market. XRP also loses 16%, Solana over 21%, dragging bitcoin down with them (-7%).

Binance took the opportunity to sell a substantial portion of its ETH and SOL reserves. These sales coincide with the unlocking of $2 billion of SOL scheduled for March 1. The solana is down 54% from its all-time high.

Kraken is also taking advantage of the hack to get rid of its ETH and SOL reserves. In other words, it seems that the Alt Season is starting to have a lot of lead in the wing.

Bitcoin stands firmer

The hack was certainly the spark, but other bad news contributes to the prevailing gloom. Notably, the fact that the states of Montana, North Dakota, and Wyoming rejected bills aimed at creating bitcoin reserves.

That said, these are small states that do not carry much weight. A green light in Texas or Florida would quickly revive optimism, particularly for the creation of a strategic reserve at the federal level. That’s why Binance and Kraken are not selling their bitcoins…

Another explanation suggested here and there: customs duties against Mexico and Canada. The latter will mean inflation, which will prompt the Fed not to lower its interest rates. However, high rates reduce liquidity in the system, hinder economic growth, and, by extension, weigh on stock markets.

But bitcoin is not a multinational whose profits could suffer from the economic slowdown. On the contrary, inflation is a boon, especially since its correlation with stock markets has significantly faded in the past two years.

There aren’t really many reasons to sell one’s bitcoins. While some panic, Michael Saylor just bought $2 billion worth of bitcoins. His newly renamed company (Bitcoin) Strategy now holds nearly 500,000 BTC.

Could he (thanks to his frequent meetings with the Trump government) be aware of the imminent creation of a U.S. bitcoin reserve? Patience…

Don’t miss our article: Ethereum: The descent into hell.