Cryptocurrencies fall to open August, bitcoin dips under $29,000
PUBLISHED TUE, AUG 1 202311:23 AM EDTUPDATED WED, AUG 2 20237:05 AM EDT
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The crypto market came under pressure as the new month kicked off, with investors weighing the risks of the latest DeFi hack and another federal court decision on when to treat crypto assets as securities.
On Tuesday, bitcoin was little changed at $29,271.90, according to Coin Metrics. Earlier in the day it briefly fell to about $28,800. It ended July down 3.93%.
Ether, which has joined bitcoin in recent months as a sort of large cap, blue-chip trade in crypto, also cut its Tuesday losses and was last down by 0.5% at $1,850.17, after finishing July lower by 3.35%. It was under extra pressure due to a recent exploit in DeFi giant Curve, however.
“Ethereum is sort of the king of DeFi and Curve is viewed as one of the most important liquidity providers in DeFi,” said Josh Gilbert, an analyst at investment firm eToro. ”[Ethereum] is a massive project so it’s not going to come under as much pressure as smaller alts but that Curve issue is ultimately the reason we’re seeing weakness in Ethereum right now.”
Altcoins fell after a federal judge said some crypto assets are securities regardless of the context in which they are sold. This opinion contradicted an earlier ruling from the same district court that said Ripple’s XRP may not be categorized as a security in all circumstances. XRP was last down 1.5%, having also recovered earlier losses.
Other tokens named in the recent SEC lawsuits against Binance and Coinbase as potential securities inched closer to unchanged after being under pressure earlier, including those tied to the Solana and Cardano networks, which at one point fell more than 2%.
DeFi giant hacked
Other smaller coins, specifically in the DeFi segment of the market, recovered losses, too. CRV, the native token of Curve Finance, a stablecoin-focused decentralized exchange, was up 8% in the past 24 hours, according to CoinGecko. Aave cut its 9% loss in the same period and was little changed, while the tokens tied to Compound and the Synthetix network were down 5% and 4%, respectively.
Curve, a stablecoin exchange built on Ethereum, was exploited Sunday due to a bug in the smart contract programming language called Vyper. The hacker targeted three liquidity pools for tokens paired with ether and CRV as well as several ERC-20 tokens issued on Alchemix (alETH), Metronome Synth (smETH) and JPEG’d (pETH). It drained as much as $100 million worth of cryptocurrency from the platform, including $20 million of CRV and a version of ether, according to CryptoQuant.
“We’ve unfortunately had this scenario in crypto a few times over the past 12 to 18 months. Whenever investors hear the word hack ... it puts the whole crypto market on the backfoot and that’s what’s happening here,” Gilbert said.
Bitcoin volumes have also dropped significantly from their recent highs, despite the price of bitcoin proving so resilient this year. It traded in a tight range throughout July, neither breaking above a key level of $31,500 nor below $25,200, and has soared 76% in 2023.
“We had a lot of buzz recently around the Blackrock ETF but that can only drive bitcoin for so long and for so far. We got plenty of optimism with it but that initial optimism is fading slightly,” Gilbert said. “When bitcoin heads south so do most altcoins ... and they’re selling off a little bit further given what we’re seeing with Curve.”