Bitget Hacked for $380M… Are Assets Safe?

This recorded a massive $2.1 billion inflow, the largest in 11 months, becoming a catalyst for a rebound. The market, which rose early in the week and then leveled off, defended against a decline thanks to five consecutive days of net inflows. This fund size is $2.1 billion, the largest in the past 11 months.

This large-scale capital inflow led to Bitcoin's rise early in the week, and even amidst sideways trading after mid-week, it maintained net inflows for five consecutive days, effectively defending against Bitcoin's decline.

Bitcoin, which showed a synchronized trend with gold in August, began to synchronize with the Nasdaq again in September.

This is interpreted as a re-emphasis of Bitcoin's nature as a risk asset, and the alleviation of inflationary pressure due to falling oil prices is analyzed to have had a positive impact on risk assets overall.

This appears to have contributed to Bitcoin's bullish trend by creating expectations that stablecoins could play an important role in asset management given the urgent demand for short-term government bonds.

The government bond auction market, which was stable in early September, experienced selling pressure during the Chuseok holiday, leading to upward pressure on interest rates. Last Thursday, the 10-year yield recorded over 5.2% for the first time in 19 years, and returned to this level on Monday morning.

Last Thursday, the 10-year government bond yield rose to over 5.2%, marking its highest level in approximately 19 years, and maintained over 5.2% on Monday morning, affecting risk asset markets such as the KOSPI and Bitcoin.

High interest rates continue, with the 30-year government bond yield recording 5.48%.

Typically, when interest rates exceed a certain level, funds shift from the stock market to the bond market. However, currently, funds are not significantly flowing out of risk assets like stocks, holding steady due to expectations of an economic boom.

This is interpreted as market participants maintaining positive outlooks for economic growth despite high interest rates.

The market is keenly watching whether the upward trend in Bitcoin, a risk asset, will resume.

Expectations are building that if measures to ease US-China tensions, such as tariff reductions, are announced, they will positively affect price stability and economic growth, which could lead to an upward trend in risk assets, including Bitcoin.

In the past, when the 30-year yield broke at 5.5%, the Fed's bond purchases played a decisive role. Accordingly, the market is now both wary of and hopeful for potential Fed intervention to defend against economic deterioration from prolonged high interest rates.

Prolonged high interest rates risk sharply increasing the cost of debt extensions for businesses and households, making the possibility of the Fed intervening as a 'game changer' a crucial point of interest.

Similar to the 2023 rate hike cycle when Bitcoin prices rose due to expectations of Fed intervention, the market is currently watching for potential liquidity provision amidst corporate default predictions. However, the phenomenon of co-rising high interest rates and risk assets warrants caution.

Indeed, there was a case in 2023 where Bitcoin prices rose due to expectations of Fed intervention during the rate hike cycle, and currently, there is a phenomenon of interest rates and risk asset prices rising together, which requires caution.

Iranian Foreign Minister Araghchi stated that the proposal to reopen the Strait of Hormuz was merely a comment through the media, not an official channel, and maintained a willingness to negotiate. Earlier, President Trump rejected the reopening plan within 7 days, stating that Iran's conditions for military de-escalation were excessive.

However, the Iranian Foreign Minister emphasized that President Trump's remarks were through the media and not yet an official stance, maintaining a willingness to negotiate.

This situation is exacerbating uncertainty in the Middle East.

The possibility of Iran using alternative routes to export crude oil by turning off its Automatic Identification System (AIS) has been raised. Reports of increased Saudi export volumes during the blockade of Hormuz and the Red Sea, even higher than pre-war levels, led the market to question the sustainability of these exports. The Iranian Foreign Minister emphasized that former President Trump's remarks were for the media only, underscoring official negotiation intent.

There are also observations that Iran does not have 100% control over the Strait of Hormuz and that alternative routes for crude oil exports exist where the AIS (Automatic Identification System for ships) can be turned off.

Given recent inflation and the rising trend in government bond yields, it is widely expected that their statements will not be positive for the market.

Being close to Chairman Powell, he is considered a key variable that could change market sentiment. If he mentions further rate hikes, the market could reverse sharply. He is currently classified as a centrist but has shown dovish views. If he mentions further rate hikes, there is a possibility that market sentiment could reverse sharply.

Given his close relationship with Chairman Powell, if even President Williams mentions further interest rate hikes, the market sentiment could rapidly reverse, so his remarks are drawing significant attention.

This week, the release of the Personal Consumption Expenditures (PCE) price index on Wednesday and the employment report on Friday will serve as important market variables.

Moderately negative employment figures could positively impact the risk asset market, and the Financial Times and others have suggested that the unemployment rate could rise to 4.1-4.2%.

This incident caused damages of $387.5 million, the largest in the past 1 year and 9 months. The perpetrators are believed to have taken control of the backend to forge transaction approvals, and 20% of the stolen funds were leaked as XRP, indicating an attempt at money laundering.

This is the largest hacking incident in 1 year and 9 months, presumed to have involved backend control and forged transaction approvals, with 20% of the leaked funds attempted to be laundered into XRP.

Bitget plans to resume all withdrawals as of October 2nd.

There is a strong debate between external hacking and insider involvement. It is analyzed that the security system was not directly breached, but rather that withdrawal slips were intricately forged to deceive the exchange without seizing the vault keys.

This is similar to the method of defrauding cash with forged checks in the movie 'The Big Swindle,' and the exchange tends to attribute it to a specific employee's mistake.

The dispute continues between external hacking and insider involvement.

Out of the total hacked amount of $380 million, only about 20%, or $70-80 million, has been moved so far, with the remaining assets yet to be laundered, leaving open the possibility of tracking and freezing them.

The nature of digital assets, where every transaction is tagged with an address, makes money laundering difficult, which also underpins these compensation promises.

Self-hacks typically involve stealing customer assets and closing the exchange when operations become unfeasible. Given that Bitget has promised to compensate for damages, the likelihood of a self-hack is considered low.