PiCK

Summary

  • Bitcoin fell to $75,736 after the Binance hack, but attention is focused on whether the token can recover because it has rebounded after past major hacks.
  • With losses from the latest breach totaling about $6.3 billion, more than 150 times the 2019 incident, Binance said it would fully cover the damage through its protection fund and corporate funds while moving to buy back the stolen assets.
  • Reports said easing pressure from interest rates and oil prices, a resumption of ETF inflows, reduced odds of additional Fed tightening, and broader macro conditions will be the key variables behind any future medium- to long-term rebound in Bitcoin.

Forecast Trend Report by Period

Bitcoin rebounded 140% after the hack seven years ago

Losses this time are 150 times larger

Tightening and election risks test the recovery

Bitcoin’s direction is back in focus after Binance, the world’s largest crypto exchange, suffered another major hack seven years after its last high-profile breach. In the 2019 attack, Bitcoin plunged and then rebounded about 140% in roughly seven weeks. This time, however, losses exceed the 2019 incident by more than 150 times, and the attack spread across multiple networks, putting Binance’s recovery and investor sentiment to the test.

Bitcoin fell as low as $75,736 during trading on Nov. 3 in Binance’s Tether (USDT) market. That was about 6.9% below the $81,343 close on Oct. 28, the day before the hack. It marked the first time in about a month and a half, since Sept. 16, that Bitcoin traded below $76,000. The token later recouped part of its losses, but it has yet to regain $80,000 since the incident.

Bitcoin hit a record high after overcoming the hack

Binance was also hit by a Bitcoin hack in May 2019. Attackers obtained users’ API keys and two-factor authentication codes through phishing and malware. They then used multiple accounts to bypass withdrawal security checks and stole 7,000 Bitcoin in a single transaction, worth about $40 million at the time. Binance said the damage was limited to its Bitcoin hot wallet and pledged to cover all losses through its Secure Asset Fund for Users, or SAFU.

After news of the breach, Bitcoin, which had traded at about $5,954 just before the incident, fell to $5,772.20 the next day, a drop of about 3.1%. It reclaimed the $6,000 level less than a day after hitting that low. Binance resumed deposits and withdrawals on May 15 after overhauling its security systems. With services restored within a week, Bitcoin extended its advance.

By June 26 that year, Bitcoin had climbed to $13,970 intraday, about 142% above the post-hack low of $5,772.20. In other words, the price more than doubled in about seven weeks. Expectations for broader market adoption also grew after Facebook announced its Libra crypto project. About 19 months after the hack, Bitcoin rose above $20,000 and surpassed its previous peak.

An earlier exchange hack triggered a steeper selloff. When about 120,000 Bitcoin were stolen from Bitfinex in August 2016, Bitcoin fell more than 23% in a day on Bitstamp to as low as $465.28. About seven months later, on Feb. 24, 2017, it reached $1,200 on the same exchange and set a new all-time high. That was roughly 158% above the low. At the time, the industry viewed expectations for approval of a US Bitcoin exchange-traded fund as a key driver of buying.

Even after about $1.5 billion worth of Ether was stolen from Bybit on Feb. 21 last year, Bitcoin eventually went on to set another record. The price remained weak after the hack and then came under added pressure from US tariff concerns, falling to $74,508 on April 8. A month later, however, it reached $111,980, a rebound of about 50%. That marked a fresh high roughly four months after the hack. Easing US-China trade tensions, a weaker dollar and broader institutional acceptance of crypto supported the advance.

Bigger losses and election variables raise the stakes for another rebound

The latest Binance incident is much broader than past cases. Binance said on Oct. 29 that losses from the hack totaled about $6.3 billion. Funds were drained across 10 blockchains, including Bitcoin, Ethereum and Tron. Unlike in 2019, when one Bitcoin wallet was attacked, this time assets were taken from multiple networks. Binance said it would absorb the losses in full through its protection fund and corporate funds. On Oct. 30, it announced that it had separately secured more than $6.34 billion in company funds. It also moved to buy back the stolen crypto in the market and through over-the-counter trades.

In earlier exchange hacks, expectations for market expansion and fresh buying helped drive Bitcoin’s rebound. This time, investors are watching not only Binance’s operational recovery but also whether pressure from interest rates and oil prices eases and whether institutional money returns. In a report on Nov. 3, 21Shares cited the normalization of withdrawals, verification of reserve assets and a resumption of ETF inflows as key variables. The report also highlighted a scenario in which fears of further Federal Reserve tightening fade and credit markets stabilize.

Institutional money is still flowing out. Bloomberg data show US spot Bitcoin ETFs posted combined net outflows of $1.04 billion over the two trading days of Oct. 30 and Nov. 2. Even if Binance’s repurchases of stolen assets create short-term demand, that is not viewed as the same kind of sustained buying power as fresh investor inflows.

The market reaction to the US midterm elections has also been mixed. During voting on Nov. 3, Bitcoin approached $78,000. It then slipped to around $75,700 early in the vote count as the odds rose that Democrats could win control of both the House and Senate. The move reflected concerns that crypto legislation, including the Clarity Act, could be delayed if Democrats take Congress.

Still, Bitcoin erased its initial losses as the election outcome began to come into focus. Dick Lo, founder of TDX Strategies, said political uncertainty was easing as the result became clearer. That reduction in uncertainty, separate from regulatory concerns, helped bring in short-term buying.

Some investors also argue political shifts are unlikely to derail crypto’s institutional adoption. Mark Connors, chief investment officer at Risk Dimensions, said investors should not spend too much time trying to predict the election outcome. Banks and the broader financial industry are already investing aggressively in stablecoin payment networks and round-the-clock trading infrastructure. Even if Democrats win both chambers, crypto adoption will continue, he said.

Andre Dragosch, head of research for Europe at Bitwise, and others wrote in a Nov. 2 report that macro factors matter more for crypto than the midterm elections. They pointed to financial conditions, inflation and anxiety around artificial intelligence investment. If growth concerns ultimately lead to policy support from the Fed, that could become a medium- to long-term catalyst for Bitcoin’s rebound.

Doohyun Hwang