Bitcoin (BTC) experienced a strong selling spree yesterday, following a historical hack of the world’s largest crypto exchange, Binance, that resulted in the loss of $6.3 billion.
The top crypto closed the session with a 4.1% loss, plummeting below our buy zone just a day after the Federal Reserve decided to leave rates unchanged as expected.
The exchange confirmed the hack earlier this morning and reassured users that their funds were safe. Nearly half of the stolen funds have been frozen by multiple blockchains and stablecoin issuers such as Tether and Circle.
However, recovering the other half will be quite challenging. This highlights the persistent risks that the crypto industry continues to face.
Standard Chartered Sees Persistent Selling Ahead
Binance is just the latest exchange to get hit by high-profile hacks. In the past 12 months, Bybit and Bitget experienced similar incidents, and the resulting losses exceeded $1.8 billion.
The head of digital assets for Standard Chartered in London, Geoffrey Kendrick, made some gloomy comments about the impact that Binance’s hack could have on the crypto market.
In a letter to clients, the analyst commented: “I suspect the negative price action still has some way to go. Only after assets are unfrozen and more detail of the hack emerges will we find a new base.”
Thus far, the impact of exchange hacks on the price of cryptocurrencies has been limited to a few days of bearish price action.
However, yesterday’s decline managed to break an important support area for BTC at $80,000. Both Wall Street and whale wallets had been accumulating strongly at this level as the market’s overall mood continues to be bullish despite the recent correction.
Nonetheless, if these deep-pocketed players change their mind about Bitcoin’s mid-term outlook and decide to dump their holdings to prevent higher losses, that could result in a massive drop to below what we see as the nearest and most likely support for the top crypto — the $75,000 area.
Net inflows to exchange-traded funds (ETFs) linked to Bitcoin finished yesterday in positive territory, but that could change today. If we break a 4-day streak of positive inflows today, it is highly likely that we’ll see the continuation of this downtrend during the weekend.
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See all Bitcoin forecastsBTC Hovers Above 200-Day EMA But Risks 13% Drop If It Breaks Below It
Turning to the daily chart, we are currently tagging the 200-day exponential moving average (EMA) from above for the first time since BTC’s bull market officially commenced.
This is a key support to watch that could easily trigger further cascade liquidations if it is broken in the next few days.
In the past 24 hours alone, $1.3 billion worth of long positions have been wiped out as a result of the Binance hack. If this technical indicator does not hold, the next support area to watch for BTC would be $75,000.
If the price bounces strongly off this level, then we may get a recovery toward $85,000 in the near term, as the market may have used this Binance hack news as an excuse to grab liquidity at lower levels while trapping bears in the process.
Nonetheless, if the $75K area is lost, that could mark the beginning of a deeper correction to the $72,000 – $65,000 range to fill the big price imbalances caused by the late-August rally.