Binance Was Hacked 7 Years Ago Too. Bitcoin Then Surged 140%: Hwang Doo-hyun’s Web3+

Bitcoin rebounded 140% after the hack seven years ago

This time, losses are 150 times larger

Tightening and election risks test any recovery

The latest major hack at Binance, the world’s largest cryptocurrency exchange, is drawing fresh attention to Bitcoin’s next move. After the 2019 breach, Bitcoin slumped and then rebounded about 140% in roughly seven weeks. This time, however, losses are more than 150 times larger and the attack spanned a broader range of assets, putting the exchange’s recovery and investor sentiment to a tougher test.

On Nov. 3, Bitcoin fell as low as $75,736 during intraday trading on Binance’s Tether market. That was about 6.9% below its closing price of $81,343 on Oct. 28, the day before the hack. It was the first time Bitcoin had slipped below $76,000 since Sept. 16, about six weeks earlier. The token later pared some of its losses, but it has yet to reclaim $80,000 since the incident.

Bitcoin Hit Records After Earlier Exchange Hacks

Binance also suffered a Bitcoin-related hack in May 2019. Attackers used phishing and malware to obtain API keys and two-factor authentication codes tied to user accounts. They then used multiple accounts to bypass withdrawal security checks and withdrew 7,000 Bitcoin in a single transaction. That was worth about $40 million at the time. Binance said the damage was limited to its Bitcoin hot wallet and pledged to cover all losses through its Secure Asset Fund for Users, or SAFU.

After news of the hack broke, Bitcoin, which had traded around $5,954 just before the incident, fell to $5,772.20 the next day. That was a decline of about 3.1%. It recovered the $6,000 level in less than a day after hitting that low. Binance overhauled its security systems and resumed deposits and withdrawals on May 15. With services normalized within a week, Bitcoin extended its rally.

On June 26 that year, Bitcoin climbed as high as $13,970 intraday. That was about 142% above the post-hack low of $5,772.20. In effect, the price more than doubled in about seven weeks. Optimism over Facebook’s Libra cryptocurrency project also fueled expectations for broader market growth at the time. About 19 months after the hack, Bitcoin broke above $20,000 and set a new record high.

An even steeper drop followed the theft of about 120,000 Bitcoin from Bitfinex in August 2016. Bitcoin tumbled more than 23% in a day on Bitstamp, falling to $465.28. But about seven months later, on Feb. 24, 2017, it reached $1,200 on the same exchange and set another all-time high. That marked a gain of about 158% from the low. The industry at the time viewed expectations for approval of a US Bitcoin exchange-traded fund as a driver of buying.

Even after about $1.5 billion worth of Ether was stolen from Bybit on Feb. 21 last year, Bitcoin eventually climbed to a new high. The token remained weak after the hack, and concerns over US tariffs helped drag it down to $74,508 on April 8. A month later, it hit $111,980, marking a rebound of about 50%. That was a fresh record about four months after the hack. Easing US-China trade tensions, a weaker dollar and broader institutional acceptance of crypto underpinned the advance.

Bigger Losses, Election Risks Raise the Stakes for Any Rebound

The latest Binance incident is far broader than earlier cases. Binance said on Oct. 29 that losses from the hack totaled about $6.3 billion. Funds were drained from 10 blockchains, including Bitcoin, Ethereum and Tron. Unlike the 2019 breach, when a single Bitcoin wallet was hit, this time assets were taken across multiple networks. Binance said it would absorb all losses through its protection fund and company money. On Oct. 30, it announced that it had separately secured more than $6.34 billion in corporate funds. It also moved to buy back the stolen crypto through market purchases and over-the-counter trades.

In earlier exchange hacks, expectations for market expansion and fresh buying helped power Bitcoin’s rebound. This time, attention is on more than Binance’s recovery. Easing pressure from interest rates and oil prices, along with a return of institutional money, are also seen as key conditions. In a report on Nov. 3, 21Shares identified normalized withdrawals, verification of reserve assets and a resumption of ETF inflows as key variables. The firm also gave weight to a scenario in which concerns over further tightening by the Federal Reserve ease and credit markets stabilize.

Institutional money is still flowing out. Bloomberg data show US spot Bitcoin ETFs posted combined net outflows of $1.04 billion over the two trading days of Oct. 30 and Nov. 2. Even if Binance’s repurchases of stolen assets create short-term demand, that is difficult to equate with sustained investment inflows that could drive a broader rally.

The market response to the US midterm elections has also been mixed. During voting on Nov. 3, Bitcoin approached $78,000. It then slipped to around $75,700 early in the vote count as the odds of Democrats taking both the House and Senate increased. That reflected concern that crypto legislation, including the Clarity Act, could be delayed if Democrats control Congress.

Still, Bitcoin erased its early losses as the election outcome came into clearer view. Dick Lo, founder of TDX Strategies, said political uncertainty was easing as the result became clearer. The fading uncertainty, separate from regulatory concerns, appeared to draw in short-term buying.

Some investors also argue that politics will not derail the broader move toward institutional crypto adoption. Mark Connors, chief investment officer at Risk Dimensions, said investors should not spend too much time trying to predict the election outcome. Banks and financial firms are already investing aggressively in stablecoin payment networks and 24-hour trading infrastructure. Even if Democrats take both chambers, crypto adoption will continue, he said.

André Dragosch, Bitwise Europe’s head of research, and others wrote in a report on Nov. 2 that macroeconomic factors carry more weight for crypto than the midterms. They cited financial conditions, inflation and anxiety around artificial-intelligence investment. Concerns over a slowing economy could ultimately lead to policy support from the Fed, which would support a medium- to long-term rebound in Bitcoin.