Daily Crypto Signals: Ethereum Faces Sell Pressure, Balancer Suffers $116M Exploit
The crypto market experienced turbulence as digital asset investment products recorded $360 million in outflows following hawkish Federal
Quick overview
- The crypto market faced significant turbulence with $360 million in outflows following hawkish signals from the Federal Reserve.
- Ethereum traded below $4,000 amid declining institutional demand and a major security breach at Balancer resulted in over $116 million stolen.
- Despite the bearish sentiment, crypto whale HyperUnit opened $55 million in long positions, indicating a potential market rebound.
- The Balancer hack raised concerns about the reliability of smart contract audits in the rapidly evolving DeFi sector.
The crypto market experienced turbulence as digital asset investment products recorded $360 million in outflows following hawkish Federal Reserve signals, while Ethereum ETH/USD traded below $4,000 amid declining institutional demand and a major security breach at DeFi protocol Balancer resulted in over $116 million stolen in staked Ether tokens. Despite the bearish sentiment, crypto whale HyperUnit opened $55 million in long positions betting on a Bitcoin BTC/USD and Ethereum rebound.
Crypto Market Developments
Last week, the cryptocurrency market had a lot of problems. Investment products lost $360 million, mostly because investors were worried about what Federal Reserve Chair Jerome Powell said about future interest rate decreases. Powell’s statement that another rate drop in December was “not a foregone conclusion” kept markets in a state of uncertainty, even though he cut rates on Wednesday. This was made worse by the fact that there was no economic data available because the government was still shut down.
The US markets took the biggest hit, with $439 million leaving the country, but Germany and Switzerland helped a little by bringing in small amounts of money. Bitcoin exchange-traded funds had the biggest drop, with $946 million in redemptions. This shows that investors are generally avoiding risk. The market, on the other hand, exhibited evidence of selective optimism. Solana went against the trend and brought in $421 million in inflows, its second-largest on record. This was driven by demand for newly launched US ETFs, which raised year-to-date totals to $3.3 billion.
The Crypto Fear & Greed Index shows how people feel about the market right now. It is at 42 out of 100 in the “Fear” zone. Adding an interesting twist to the way the market works, well-known crypto whale HyperUnit, which made $200 million during the tariff-led crash in October, has opened $55 million in long positions on Hyperliquid, with $37 million in Bitcoin and $18 million in Ether. This suggests that they think the market will soon bounce back.
Changpeng “CZ” Zhao, co-founder of Binance, bought over $2.5 million worth of the Aster token with his own money, which caused the price to rise by more than 30%. This shows how powerful people still have an effect on market movements. Analysts say the bottom may be approaching. For example, Santiment, a blockchain analytics platform, says there are 208,980 fewer Bitcoin on exchanges now than there were six months ago. This could lower the danger of more sell-offs.
Ethereum Faces Mounting Pressure
Ethereum has had a tough month, dropping 14% and falling below the psychologically critical $4,000 mark to trade around $3,724. The second-largest cryptocurrency by market capitalization is facing a slew of bearish signals that point to more downside risk. Technical analysts say it might drop below $3,000 or lower.
The main reason Ethereum is weak is because institutional demand is falling. This is shown by the fact that US-based spot Ethereum ETFs are still losing money. These investment products lost $363.8 million over three days in a row, which is a strong evidence that institutional investors are trying to reduce their risk. It looks like this pattern is related to money moving into newly minted Solana ETFs, which have seen inflows for four days in a row. Data from StrategicETHreserve.xyz shows that the total amount of strategic reserves and ETFs held by everyone has declined by 124,060 ETH since mid-October. This shows that big companies and institutions are less interested in them.
Technical analysis shows that things don’t seem good for Ethereum bulls either. Since October 7, ETH has been making a descending triangle pattern on its eight-hour chart. This is a bearish reversal pattern with flat support levels and resistance lines that slope down. The pattern’s measured goal is $2,870, which is a possible 22% decline from where it is now. The SuperTrend indicator gave a sell signal on Thursday, which added to the negative pressure. This was identical to the signal it gave on October 7, which led to a 22% drop. Analysts say that Ethereum is currently in a “crucial support zone” around $3,700. If it doesn’t quickly go back above $4,000, it could collapse to $3,500 or lower.
Balancer Exploit Raises Security Concerns
A big security breach at the automated market maker (AMM) Balancer had a big effect on the decentralized finance (DeFi) sector. The protocol was hacked, and an attacker stole $116 million worth of digital assets, which were sent to their wallet. The stolen money was made up of liquid staked Ether tokens, such as StakeWise Staked ETH (OSETH), Wrapped Ether (WETH), and Lido wstETH (wSTETH).
The attack only affected Balancer’s V2 Composable Stable Pools, and it is thought that a “faulty access check” in the smart contract let the attacker order a withdrawal of cash. This event has caused a lot of worry in the DeFi sector, especially since the Balancer V2 vault had been audited more than ten times by top security firms like OpenZeppelin and Trail of Bits. The hack has brought back up the question of how reliable smart contract audits are in an ecosystem that changes quickly. To get the money back, Balancer’s team promised the attackers a 20% white hat bounty, which was almost $23 million, provided they returned the full amount within 48 hours.
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