Cryptocurrency Market Faces Challenges Amid WazirX Hack and Bitcoin Struggles
The cryptocurrency market is experiencing significant turbulence as Bitcoin struggles to maintain its position above $65,000. After falling below $64,000 during Wednesday’s American trading hours, the world’s leading cryptocurrency has been fighting to regain its footing. This volatility comes at a time when the crypto community is grappling with the aftermath of a major hack on the Indian crypto exchange WazirX.
The malicious attack on WazirX has sent shockwaves through the market, resulting in substantial losses for several cryptocurrencies. The platform’s native token WRX and the popular meme coin Shiba Inu (SHIB) have been particularly affected. The hacker managed to steal over $230 million in customer funds, including a staggering $100 million in SHIB and $52 million in ETH, from WazirX’s Safe Multisig wallet. In the wake of the attack, the hacker has been actively converting the stolen assets into Ethereum and utilizing Tornado Cash to obscure the movement of funds.
Impact on Indian Crypto Market and Institutional Participation
The repercussions of the WazirX hack have been felt strongly in the Indian crypto market. The bitcoin-rupee pair has experienced a significant decline of 11%, dropping to 5.1 million rupees ($60,945). Similarly, the USDT-INR pair on WazirX has slipped by 8%. These developments highlight the vulnerability of cryptocurrency exchanges and the potential for such incidents to cause widespread market disruption.
Despite these challenges, there are signs of growing institutional participation in the crypto market. The Chicago Mercantile Exchange (CME) now accounts for 83% of total Bitcoin futures open interest and 65% of Ethereum open interest. This increased involvement from institutional players suggests a maturing market and could potentially provide some stability in the face of recent volatility.
Political Developments and Their Impact on Crypto
The cryptocurrency market is also being influenced by political developments in the United States. President Joe Biden’s recent Covid-19 diagnosis has led to speculation about his potential withdrawal from the November election. On the crypto-based prediction market platform Polymarket, the chances of Biden dropping out have risen to 68%. This uncertainty in the political landscape could have implications for the crypto market in the coming months.
Meanwhile, former President Donald Trump’s perceived chances of victory are being closely watched by crypto investors. Trump’s recent assassination attempt has boosted his prospects and is believed to have contributed to Bitcoin’s rally to over $65,000. However, market strategist Joel Kruger of LMAX Group cautions that the crypto rally might stall if the stock market sell-off turns into a correction. Nonetheless, Kruger suggests that over a longer time frame, cryptocurrencies may provide a haven for investors fleeing stocks, potentially supporting continued growth in the crypto market.
