727 FinanceBinance hacked with $2.5 billion in assets frozen; Bitcoin selling pressure is limited and instead becomes a de facto lock-up, while ETH becomes the main source of selling pressure. Amid market panic, understand on-chain capital flows and subsequent impacts.
Author: Benson Sun, founder of CoinKarma
I know everyone is panicking right now, so let me look at this from a different angle.
Regarding the Binance hack this time, officials have currently confirmed that about $2.5 billion in assets have been frozen, roughly half of the total amount stolen. The remaining bulk is mainly BTC and ETH.
Let's start with BTC. About a billion-plus dollars was taken, but turning that into actual selling pressure is not easy.
Bitcoin does not have a large mixer with sufficient liquidity like Tornado Cash on ETH. These addresses will also be flagged by major exchanges and on-chain analytics firms, making transfer or monetization much harder than for ETH.
Looking back at past large-scale theft cases, the Bitcoin stolen from Bitfinex in 2016 sat untouched for years. Of the roughly 1,800 BTC stolen from cold wallet manufacturer Coldcard in July this year, as of early September 90% was still untouched, and the hackers had only swapped out a small portion sporadically through cross-chain bridges.
This Binance hack is ten times that scale. For over a billion dollars of BTC, just splitting addresses and mixing coins alone is a project measured in years, and then going through discounted OTC afterward makes the whole process take at least several years.
So the stolen BTC looks like bearish news on the surface, but is actually a form of locked supply. On the other side, if Binance uses SAFU for compensation, it will later have to replenish the Bitcoin. Netting out, the short-term selling pressure from the stolen BTC is almost zero, and on Binance's side there may instead be buying pressure.
ETH is worse off. A lot of ERC-20 tokens are swapped into ETH and then dumped into Tornado, and basically become very hard to trace. At most, what could truly become market selling pressure is on the order of a billion-plus dollars.
Market confidence will certainly be affected, but the direct selling pressure on Bitcoin itself is not as large as imagined.
I hope that after this incident, the entire industry can truly unite and pay attention to cybersecurity issues in the post-AI era. From hot wallet management and signature authorization to increasingly powerful attack methods in the AI era, and even quantum-resistant planning, all of these should be prepared for in advance.