Key Takeaways:
On Thursday, June 27, a hacker linked to the recent attack on Japanese cryptocurrency exchange DMM Bitcoin, transferred 500 BTC, worth approximately $30 million, to a new address.
This transaction has raised concerns about a potential market dump amid the Bitcoin price volatility, considering there have already been sell-offs on a massive scale by government entities and miners.
Hackers Exploit DMM Exchange’s Reserve Wallet To Steal 4,500 BTC
DMM Bitcoin suffered an exploit on May 31, which saw more than $305 million worth of Bitcoin stolen from its reserves. In a blog post on its website the day after the hack, the exchange said 4,502.9 BTC “leaked” out of its platform.
Initially, the transaction was thought to be a large-scale transfer of BTC, but the exchange was too late to realize what was happening. Data provided by blockchain security expert Blocksec showed that the hackers divided the stolen Bitcoin across 10 wallets in batches of 500 BTC.
DMM Bitcoin immediately halted buy orders for spot trading, the opening of leveraged trading positions, the creation of new accounts, and the processing of crypto withdrawals. The platform now allows withdrawals in yen, albeit at a slow pace.
DMM Bitcoin assured customers that all their BTC deposits would be guaranteed. The exchange did not provide much details on what caused the hack.
The incident marked one of the largest exploits in the crypto market in recent years and is the biggest one to have occurred so far in 2024.
The unauthorized access to its BTC wallet highlighted significant vulnerabilities in the exchange’s security infrastructure. Soon after the attack, Japan’s Financial Services Agency (FSA) mandated DMM Bitcoin to thoroughly investigate the breach and implement measures to safeguard customers from any potential damage.
Market Fears Hackers Could Dump Their Loot Once Bitcoin’s Price Recovers
Despite the fear of a market dump, the transaction made by one of the hackers seems to suggest otherwise. Nonetheless, the market remains cautious as the hacker could liquidate the stolen reserve holdings for a huge profit once Bitcoin marks a rebound.
The broader Bitcoin market has been experiencing significant sell-offs. Last week, the German government caught the headlines for liquidating its Bitcoin holdings. German authorities recently transferred 595 BTC, worth over $36 million, to major crypto exchanges.
This is part of a larger sell-off strategy by the government as the address has offloaded over 6,500 BTC, worth $400 million, in recent days. This is according to on-chain analytics firm Arkham Intelligence, which found the wallet to have had a balance of nearly 50,000 BTC in February.
The US government has also been dumping its Bitcoin stash seized from criminals over the years. On June 26, 4,000 BTC, worth $241 million, was transferred to Coinbase Prime to be sold.
BTC Drops Below $61,000 As Governments, Miners, and Whales Sell Their Holdings in Masses
Following news that the US government is selling its holdings, BTC price dropped by 1.5% to below $61,000. Furthermore, miners have been offloading their Bitcoins to limit losses as hashprice plummeted. Bitcoin miners have sold more than 30,000 BTC, worth $2 billion, over the last three months.
Bitcoin whales, the largest individual holders of the apex cryptocurrency, also joined the mix, having contributed to over $4 billion in Bitcoin sales this month.
These extensive sell-offs have led to Bitcoin’s price hovering just above its critical $60,000 support level. Market analysts fear dropping below that mark would cause the BTC price to decline much further, down to the $40,000 range.
Analysts Expect Bitcoin and Crypto Markets to Rebound Once Ethereum ETFs Are Approved
Meanwhile, renowned crypto analyst Michael va de Poppe shared a bullish outlook for the leading cryptocurrency. In an X post, he suggested that Bitcoin could experience another decline before staging a stunning recovery.
He believes that a price reversal could occur once BTC reaches the $60,000 mark, which is the price point that is expected to trigger a bullish divergence. One major catalyst for the rebound would be the potential approval of Ethereum spot ETFs by the US Securities and Exchange Commission (SEC), which is expected next week.
Van de Poppe’s forecast aligns with growing speculation that the SEC would greenlight the highly anticipated ETFs tracking the price of Ethereum on July 2. If approved, it is sure to enhance market sentiment and drive the price of BTC alongside ETH to higher levels.
Experts believe that an Ethereum ETF could bolster institutional interest and investor confidence in the cryptocurrency market, which is largely beneficial to Bitcoin.
Fears of Miners Selling Huge Amounts of Bitcoin is Overblown, Says CoinShares Researcher
While some market participants expressed concerns about Bitcoin miners selling off their holdings in masses, James Butterfill, head of research at CoinShares, argued that those fears were overblown.
In a recent X post, he clarified that miners have sold a record amount of over $1 billion worth of Bitcoin this year. However, when that number is compared to the proportion of the total Bitcoins they hold, the sales are not as significant as they appear.
He also noted that miners selling 1% of their Bitcoin holdings this year isn’t as significant as when compared to 2% that was liquidated in 2015 and 2018.
Butterfill’s analysis suggests that while miners are selling more BTC, the overall impact of their actions on the market is relatively small compared to historical precedents. This insight provides much-needed clarity on the current market dynamics, suggesting that concerns over huge sell-off might not be as detrimental to Bitcoin’s price as initially feared.
At the time of writing, Bitcoin (BTC) is trading at $61,480 – up nearly 1% in the last 24 hours.
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