5 min read Bitcoin slumped to a low of $77,000 on Friday amid reports of a potential record-breaking security hack at Binance, the world’s largest cryptocurrency exchange.
Concerns over a $6.3 billion hack at cryptocurrency exchange Binance have sent jitters across the crypto market. Bitcoin trades 3% lower at $77,500, while Ether, the second-largest cryptocurrency, has fallen 3.8% to $2,240. Binance’s native token, BNB, is down 5% at $703.
Binance has temporarily suspended withdrawals across multiple networks following the incident. In response, stablecoin issuers Tether and Circle moved to freeze a combined $2.4 billion in USDT and USDC associated with the suspected breach.
The sell-off in the crypto market was amplified by a cascade of leveraged liquidations that had already been building before the breach news broke.
However, crypto markets are holding up better than expected in the wake of what could be the largest crypto hack ever. While the fallout has been significant, a proactive response from crypto exchanges and protocols appears to have contained the damage so far. Given the reported size of the hack, the resilience of crypto assets is notable, particularly against the backdrop of a sharp sell-off in tech stocks and a challenging macro environment.
Tech rout continues as Amazon, Intel disappoint
The continued tech rout is also hurting appetite for risk assets such as crypto.
The global tech sell-off has deepened on Friday after a string of disappointing earnings fuelled fears over the sustainability of the AI boom.
Nasdaq futures trade 2% lower as Wall Street braces for further declines at the open. This comes after a $500 billion sell-off in Alphabet shares yesterday, which sent the Nasdaq 1.4% lower.
The latest sell-off comes as investors react to Amazon’s disappointing results. The company posted weaker-than-expected sales, and cloud revenue growth was insufficient to calm concerns over rising capex spending. Amazon is falling 6% pre-market.
Furthermore, a downbeat forecast from chipmaker Intel has triggered a sharp reaction, weighing on risk sentiment, with the company’s shares down 26% pre-market.
The Nasdaq is testing a key support zone around 29,000. A break below here could see sellers gain traction.
The sell-off in tech stocks matters because the Bitcoin–Nasdaq 30-day rolling correlation coefficient remains high at 0.81, indicating a strong positive correlation. So, when tech stocks fall, crypto tends to come under pressure too.
Hot inflation and strong growth support Fed rate hike expectations
Rising Federal Reserve rate hike expectations are also adding to the downbeat mood. Data yesterday showed that core PCE, the Fed’s preferred gauge of inflation, rose to 3.1% in September. Meanwhile, U.S. Q3 GDP was also stronger than expected at 3.4%.
Strong growth and hotter inflation are fuelling expectations that the Federal Reserve will hike interest rates in December. This is bad news for Bitcoin, which performs better in low interest rate environments.
Bitcoin – technical analysis
After reaching an eight-month high above $87,000, Bitcoin has been trending lower, breaking below its 50 EMA before finding support at the 200 EMA at $76.4K.
To extend the bearish picture, sellers will need to break below this level. Sellers could then gain traction towards $72.6K, the 50% Fibonacci retracement of the move from the $57.7K low to the $87.3K high, before attention turns to $70,000, the psychological level and 61.8% Fibonacci retracement.
Any recovery would need to retake $80K, the round number, the 23.6% Fibonacci level and the 50 EMA, which could prove a challenging barrier. Above here, $84K comes into focus, ahead of $87K.
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