Binance Hack Triggers $1.57B in Crypto Liquidations as Bitcoin and Ether Slide

Bitcoin hovered around $77,350 after the $6.3 billion Binance hack triggered a sharp downturn across cryptocurrency markets, pushing futures liquidations to $1.57 billion.

Bitcoin (BTC) dropped to its lowest level since Sept. 18 after Binance, the world’s largest cryptocurrency exchange, suffered an estimated $6.3 billion exploit reportedly linked to North Korean hackers.

The leading cryptocurrency briefly plunged to $76,400 overnight before recovering part of its losses. Ether (ETH) also weakened, touching $2,170 before rebounding toward $2,220.

Approximately $3 billion in stolen assets has been frozen, while Binance has temporarily suspended withdrawals. Blockchain analytics firms TRM Labs and Elliptic attributed the attack to hackers connected to North Korea.

Weakness in technology stocks added to the pressure on risk assets. Nasdaq-100 futures declined 2.3% after Amazon (AMZN) increased its capital expenditure outlook, while Intel (INTC) shares dropped roughly 25% following disappointing guidance.

Before the exploit occurred, U.S. spot bitcoin exchange-traded funds recorded $17 million in net inflows on Thursday, marking their fourth consecutive session of positive flows, according to Farside Investors.

Crypto Derivatives Positioning

Liquidations surge: Crypto futures liquidations quadrupled to $1.57 billion as prices fell following the Binance incident. Trading volume increased 74% to $346.1 billion, while aggregate open interest (OI) declined 3% to $136.3 billion. The combination suggests traders were closing positions and capital was leaving futures markets. The taker buy-sell volume ratio also shifted slightly toward sellers after remaining evenly balanced a day earlier.

Bitcoin holds up better than ether: BTC declined 3.1% over 24 hours, while its open interest fell just 1.4%, indicating that some capital entered the market during the selloff. ETH lost 4%, accompanied by a 5.8% drop in open interest, pointing to modest capital outflows. Bitcoin’s funding rate remained positive and increased, meaning long traders continued paying short traders to maintain their positions. Ether funding also stayed positive but declined, suggesting bullish positioning was weakening. BTC and ETH accounted for more than half of total liquidations, with $522 million and $361 million, respectively.

Capital exits SOL and NEAR futures: Solana (SOL) open interest dropped 13.3% as its price declined 3.3%, indicating substantial capital withdrawals from its futures market. NEAR’s price remained relatively stable, but open interest fell 11.8%, marking a second consecutive day of outflows. Funding rates for both tokens turned negative, meaning short positions were paying longs. Their cumulative volume delta (CVD) also remained below zero, showing that market sell orders outweighed market purchases.

BNB open interest remains unchanged: BNB declined 6.2%, the steepest loss among major cryptocurrencies, even as its dollar-denominated open interest remained largely stable. Trading volume more than tripled. Negative funding indicated that shorts were paying longs, while negative CVD showed stronger market selling activity.

HYPE moves against the market: HYPE gained 15%, while open interest increased 28%, indicating fresh capital entering its derivatives market despite the broader downturn. Trading volume surged nearly eightfold. Its positive funding rate climbed, suggesting long traders were paying increasingly higher costs to maintain positions. Positive CVD also indicated that market buying activity dominated.

Funding rates show diverging sentiment: Most cryptocurrencies continued to record positive funding rates, meaning long traders were paying shorts. However, the number of assets with negative funding expanded to include BNB, SOL, NEAR and TRX. In these contracts, short traders were paying long holders. TRX recorded the most negative funding overnight, while Monero (XMR) had the highest positive rate, followed by HYPE.

Selling pressure dominates CVD: TRX, HYPE, ZEC, XMR and BCH were the exceptions among major cryptocurrencies. The remaining assets recorded negative 24-hour open-interest-adjusted cumulative volume delta, indicating that market sell orders exceeded buy orders relative to outstanding positions.

Options traders favor downside protection: Five of the six most actively traded bitcoin options were puts with strike prices below BTC’s current market value. The leading contract was a $74,000 put expiring Nov. 13. Bearish positioning was even more pronounced in ether options. A $2,000 put with the same expiration date recorded more than twice the volume of any other ETH contract, while only one of the six most-traded options was a call.

Demand for puts increases: The 25-delta skew, which measures the relative cost of puts compared with calls, increased across every measured time frame for both BTC and ETH. This points to stronger demand for downside protection. Thirty-day implied volatility indices also spiked during Asian trading as the Binance exploit prompted investors to seek puts, although part of the increase later reversed.

Token Market Update

Several tokens reportedly held and sold by the Binance attacker led the market’s rebound. Ethena (ENA) advanced 8.4%, Pepe (PEPE) gained 7.3%, Uniswap (UNI) rose 4.6% and Chainlink (LINK) added 3.7%.

Uniswap and Aave had both fallen approximately 11% on Thursday as the attacker exchanged stolen assets for ether, according to blockchain analytics account Lookonchain.

Aave (AAVE) and Arbitrum (ARB) each recovered around 4.5%. Aave had frozen its lending markets across 16 networks after the attacker borrowed approximately $44.6 million worth of ether using stolen USDT as collateral.

Thorchain (RUNE) climbed 6.2%. Elliptic and onchain investigator ZachXBT traced some of the stolen funds moving into Ethereum through the cross-chain protocol.

LayerZero (ZRO) surged 12%, making it the strongest performer in the CoinDesk 100 index. Curve (CRV), meanwhile, declined 7.2%, while Tron (TRX) lost 4.9%.

Market sentiment also weakened. CoinMarketCap’s Altcoin Season Index dropped to 45 out of 100 from 54 on Thursday. Its Fear and Greed Index fell to 36 from 43, placing market sentiment further into the “fear” category.

About The Author

ctleditor

See author's posts