Bitcoin fell back toward $77,000 as news of Binance’s multibillion-dollar breach hit the market late Thursday night EDT. Despite what is shaping up to be the largest crypto hack (by at least 2x, maybe 3x) and arguably the largest heist in all of financial history, bitcoin has held up remarkably well.
Prior to the hack, the argument over bitcoin’s prospects had already become heated. Jason Calacanis expects a brutal year ahead, citing weak ETF flows, better investment alternatives and AI drawing attention away from bitcoin. The replies were predictably hostile, especially given Mr. Calacanis’ impressively bad track record on bitcoin.
Chamath Palihapitiya, Mr. Calacanis’ co-host on the All-In podcast, has also recently soured on bitcoin despite being a longtime vocal supporter. Both All-In hosts’ arguments against bitcoin are dated, flimsy, or both, as discussed in detail in this week’s episode of Token Narratives.
By contrast, Galaxy’s Alex Thorn penned an excellent article on X titled “Why Now Is the Time to Add and Hold BTC,” which lays out an up-to-date, data-heavy case. Even with bitcoin dipping in response to the Binance hack, Mr. Thorn reminded everyone that the “invalidation of the thesis in this report requires a month below 50-week [moving average] without recovery.”
In macroeconomic news, U.S. stocks climbed on the week despite a record one-day drop in Alphabet that dragged the Nasdaq lower on Thursday. The 10-year Treasury yield ended roughly flat near 5% after the Fed held rates, oil stayed above $100 a barrel, and gold was essentially unchanged near $4,020 an ounce.
The competition for capital continues as the AI narrative, even if it’s stalling, still commands attention and investment. Anthropic is reportedly targeting a $100 billion raise at a $1.5 to $2 trillion valuation, with a listing expected November 20. Trade.xyz’s pre-IPO market on Hyperliquid already offers a price signal.
In policy, Christine Lagarde announced her departure from the ECB, effective February 7, 2027. Ripple, meanwhile, hosted Treasury Secretary Scott Bessent at Swell. Whatever one’s view of XRP, Ripple has become very good at getting consequential people into the room.
On to crypto news. HYPE rose while bitcoin sold off because Hyperliquid has attracted substantive institutional adoption. ICE (the NYSE’s parent company) and Trade.xyz announced plans for U.S. perpetual-futures markets built on Hyperliquid. The proposed market and its clearing structure still need regulatory approval.
The pièce de résistance was Stan Druckenmiller’s X debut and his endorsement of the U.S. Hyperliquid platform as an investor who plans to use it. The reaction was so incredulous that confirming his account hadn’t been hacked became part of the story. Elon Musk amplified it and Blockworks made the bullish case, but some, like Andy Constan, want to short HYPE now that Hyperliquid might be the single most consensus trade in crypto. Citrini replied that “the number of people who just now heard about Hyperliquid for the first time today is greater than the number of people who have ever traded on it and still a fraction of the total market.”
Kraken parent Payward is also pursuing its own U.S. perpetual markets on Hyperliquid, using the permissioned HIP-3* framework. Even though there isn’t a live perp DEX in the U.S. yet, the space somehow already feels a little crowded. Some forward-looking crypto-native investors believe on-chain options will be the next major opportunity.
Tokenized equities are drawing just as much attention from U.S. institutions. You know they’re paying attention (and scared) when a full-page Wall Street Journal ad urges companies to oppose tokenization by opting out. The SEC’s five-year conditional exemption gives issuers a 30-day objection window when an unaffiliated venue proposes tokenizing their shares.
Securitize answered with its own advertisement. Now that the technology is solved, the contest is shifting to issuer relationships. The argument that winners will be those who can work with traditional finance seems sensible.
Elsewhere in the business of crypto, Coinbase CEO Brian Armstrong’s insider-selling plan attracted attention. The filing permits Mr. Armstrong to sell up to 8.17 million shares from vested options, subject to price thresholds, through October 2027. Note that this is not the same as selling his entire stake, as some have intimated.
While it’s clear institutions are beginning to use crypto, the fight over the handful of retail customers is fierce. Pump.fun’s app gained ground on Fomo, which was doing extremely well a month ago. Speaking of things that were doing well not long ago, the ANSEM token gave back its summer rally even though Ansem himself says he’s spending plenty of time on it.
Prediction markets such as Polymarket and Kalshi have been able to attract retail. Then again, their marketing budgets likely run into the tens of millions of dollars. Kalshi’s latest advertisement reportedly reached 3.5 million YouTube views in six days.
Privacy-coin supporters are terrible at marketing. Several Monero supporters boasted that the U.S. government is using Monero. Not exactly. To catch a would-be traitor in a sting operation, the F.B.I. agreed to the suspect’s request for payment in Monero. “Monero, preferred by convicted traitors everywhere” doesn’t have a nice ring to it.
Zcash wasn’t to be outdone. Images circulated showing a Zcash-funded promotion for an adult show. This reopened the debate over whether the Zcash dev fund should exist. A Zcash co-founder wants to shut it down, and several prominent supporters agree.
At the intersection of crypto and AI, Sui’s Adeniyi Abiodun predicts agent-to-agent activity will exceed person-to-person activity within three years. Software agents need ways to transact. That could make AI demand useful for crypto without making every AI token useful. Algod highlighted rising Bittensor subnet revenue despite miserable TAO price action. As with VVV in previous newsletters, the question is how much of that activity benefits tokenholders.
Finally, security. Keystone first disclosed a leak of customer names, shipping addresses and order information, then the theft of a factory device-authentication key. Its statement says wallet private keys and recovery phrases were not exposed. The stolen key could nevertheless let counterfeit devices pass authenticity checks. Mark Karpeles questioned aspects of the explanation. After the Ledger stories of recent weeks, hardware wallets and self-custody in general have lost a lot of popularity.
Unfortunately, custodial solutions are getting hit now too. The aforementioned Binance hack, of course. There’s also a Bitcoin treasury company, Datavault AI, which saw its shares collapse after disclosing that it couldn’t withdraw its bitcoin. The coins had been stuck at Biconomy since June. Then there’s Indonesia’s Indodax, which suspended withdrawals, saying the pause was precautionary.
Because of AI, no setup is safe right now, custodial or self-custodial. The GMO breach saw attackers manipulating customers’ trading accounts rather than simply emptying a crypto wallet. GMO’s notices describe unauthorized trades and extortion threats. The difficulty of immediately withdrawing stolen money doesn’t make the incident harmless.
Binance supplied the week’s largest shock. Initial reports of $2.5 billion in unexplained outflows were quickly overtaken by larger estimates. Dickson Wu’s reconstruction put the loss near $6.28 billion across eight chains, with about $6.07 billion moving in the first 55 minutes. The exchange’s subsequent update estimated roughly $6.3 billion affected and about $3 billion frozen. CZ and Yi He said users would be covered. There was also a strange exchange between Elon Musk and a testy CZ.
Binance’s initial explanation points to an engineer’s compromised laptop and unauthorized withdrawals, rather than leaked wallet private keys. The onchain evidence shows signed authorizations allowing attacker-controlled code to operate an Ethereum wallet.
The thief also deposited stolen stablecoins into Aave and borrowed ETH against them, obtaining assets that issuers couldn’t freeze while leaving the stablecoins as collateral. ZachXBT linked the attack to the earlier Bitget breach and suspected North Korea’s Lazarus Group. All of this is developing.
Meanwhile, Polymarket was hacked at roughly the same time as Binance. It was a supply-chain attack involving a compromised third party. Losses range from about $2.2 million to $2.73 million.
The size of the Binance hack and some of the initial details of how it was carried out are certainly scary, but as the biggest CEX, Binance will probably be okay.
If the message wasn’t clear before, then it should be now: no one is safe. Everyone (individuals, businesses, and governments) must focus on OpSec for the foreseeable future.
Stay safe out there.
-David Sencil
