Ethereum’s Unexpected Ally: Hacker Channels $40 Million Amid 25% Price Crash

As a seasoned market researcher with a decade of experience under my belt, I can confidently say that the current state of the crypto market is reminiscent of a rollercoaster ride without the thrilling anticipation and exhilarating drops – just the relentless nausea. The recent events surrounding Ethereum are a stark reminder of the wild west nature of this industry, where hackers exploit market crashes to amass ill-gotten gains, while legitimate players struggle to navigate the turbulent waters.


Based on Bloomberg’s report, a wallet connected to a significant crypto theft that occurred two years ago converted approximately $39.75 million of the stablecoin DAI into around 16,892 units of Ethereum (ETH) during a period when the second-largest cryptocurrency suffered a steep drop of up to 23% on Monday.

Crypto Hacker Exploits Ethereum Crash

As a researcher examining the findings, it seems that the individual responsible for the 2022 cyber-attack on the cross-chain bridge protocol Nomad, resulting in the loss of nearly $200 million in cryptocurrency, capitalized on an opportunity to purchase discounted ETH with their illicit earnings.

It was observed through on-chain analysis that after acquiring ETH, the hacker transferred the tokens in groups of 100 to Tornado Cash, a cryptocurrency exchange platform emphasizing privacy, which has faced scrutiny by U.S. authorities for suspected involvement in laundering funds from crypto heists.

In spite of that, substantial selling force has kept the second-largest crypto from experiencing a notable rebound, with major corporations contributing to its continued drop.

Market analyst DeFi Mochi highlighted that the significant decrease in ETH was due to a withdrawal of investments by large financial institutions. Specifically, DeFi Mochi noted that Paradigm, a venture capital firm, sold off around 46,000 ETH tokens, valued at about $138 million when ETH was trading at $3,000 each.

In a similar fashion, it is said that Grayscale, both an asset manager and ETF issuer, allegedly sold approximately 372,000 Ether with a total value of $1.1 billion through its newly approved U.S.-based Ethereum exchange-traded fund (ETF).

To conclude, I’ve been divesting from Ethereum to the tune of over half a billion dollars in recent days, following the liquidation of our cryptocurrency reserves. This move comes amidst whispers suggesting Jump Trading may be stepping away from its role as a market maker in the crypto sector.

ETFs See $430 Million In Net Outflows

In recent times marked by negative trends, investment products tied to digital assets have recorded their largest withdrawals in more than a month, as suggested by the latest findings from CoinShares. This report reveals that these investment vehicles, encompassing cryptocurrency ETFs and trusts, collectively faced outflows amounting to $528 million during the past week.

It’s thought that outflows are happening due to rising worries about a potential recession in the U.S., ongoing geopolitical tensions, and widespread selling across various types of assets. Moreover, trading activity for these investment products has decreased significantly, making up only a quarter of the total cryptocurrency market’s volume.

Globally speaking, a significant portion of the funds exited primarily in the U.S., amounting to approximately $531 million. Additionally, Germany and Hong Kong recorded outflows of around $12 million and $27 million respectively.

While not every region felt the same impact, it’s worth noting that Canada and Switzerland experienced influxes of approximately $17 million and $28 million respectively, possibly capitalizing on the price decrease.

Over a period, Ethereum witnessed withdrawals amounting to $146 million, accumulating a net withdrawal of approximately $430 million since the debut of U.S.-based Ethereum ETFs. However, this figure doesn’t show the recent influx of $430 million into U.S. ETFs last week, which was counterbalanced by withdrawals totaling $603 million from the Grayscale Trust.

Ethereum’s Unexpected Ally: Hacker Channels $40 Million Amid 25% Price Crash

Currently, as I type this, Ethereum has successfully climbed back up to the $2,450 mark. However, it’s important to note that in just the last week, it has experienced a significant drop of around 28%, and over the past fortnight, that decline has been even more pronounced at about 31%. Yet, this recent upturn should not be overlooked.

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2024-08-06 11:42