Bitcoin dropped sharply after the Binance hack but avoided a catastrophic collapse. Former Binance CEO Changpeng Zhao says the hack looks different when measured in bitcoin rather than dollars.
Bitcoin lost more than $4,000 within hours after the hack on Friday morning, yet it avoided the kind of catastrophic collapse seen during some earlier exchange failures. Former Binance CEO Changpeng Zhao has now offered an explanation for why the damage may have been relatively limited.
Bitcoin slides from $80,000 to $76,100
CryptoPotato reported that the price slumped from over $80,000 to $76,100 later that day. The outlet notes that the drop is no small amount, but says a deeper look suggests it was less painful than it could have been.
Binance said the incident resulted in the theft of approximately $6.3 billion worth of crypto assets from compromised hot wallets. According to later updates, roughly $3 billion was frozen on-chain by the exchange and other partners. Binance promised to cover the entire loss using its SAFU fund and corporate treasury, and it stressed that user balances would remain fully protected.
Zhao points to Mt. Gox
Zhao argued that the hack was the largest in USD terms, but that the comparison changes when measured in bitcoin. He referred to the collapse of Mt. Gox more than a decade ago, which involved roughly 650,000 BTC. Those units represented more than 5% of bitcoin's total supply at the time, making that incident substantially larger relative to the size of the market.
He also argued that investors should consider more than the dollar value of stolen assets. Other important factors include the percentage of crypto supply involved, the number of users affected, how much of their assets were lost, and who absorbs the losses.
Source: CryptoPotato
Trading involves risk.
Risk Disclaimer
