Bitcoin Teeters Around $29.2K as Crypto Markets Slide Amid Curve Exploit, SEC Clampdown on Hex

Bitcoin (BTC) slid modestly lower through the U.S. trading day, dipping to as low as $29,150 Monday afternoon as digital asset investors grappled with the aftermath of a major exploit in decentralized finance (DeFi), a fresh lawsuit against Hex founder Richard Heart and macroeconomic headwinds.

The largest cryptocurrency by market value slid roughly 1% a high earlier Monday and was hovering near the lower bound of its recent tight trading range roughly between $29,000 and $29,500, and down 0.6% over the past 24 hours. The CoinDesk Market Index (CMI) was faring a bit worse, down just over 1%. Ether (ETH), the second-largest crypto by market capitalization, was lower by about 1% to $1,858, according to CoinDesk data.

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Smaller cryptocurrencies underperformed the CMI's 1% decline, which tracks the performance of a broad basket of tokens, though dominated by BTC and ETH. The native tokens of layer 1 blockchain Solana (SOL), Tron (TRX) and Avalanche (AVAX) each sunk 3-4%.

Putting DeFi tokens under particular pressure was yesterday's exploit against Curve Finance, where an attacker siphoned more than $50 million of assets from the key DeFi exchange. The protocol's CRV governance token was down 10% over the last 24 hours to 55 cents, while Curve-adjacent Convex Finance's CVX dropped 10.6%. Other large DeFi tokens also struggled, with AAVE, Compound's CMP and Maker's MKR losing between 5% and 11%.

HEX tumbled 18% during the day on the news that the U.S. Securities and Exchange Commission (SEC) sued controversial crypto founder Richard Heart and his projects Hex, PulseChain and PulseX for raising over a $1 billion by offering unregistered securities.

BTC accumulation season

In a recent market update note, Singapore-based QCP Capital said this is the season of accumulators.

"Despite BTC and ETH's indifferent response to macroeconomic factors and their current sideways trading, the market anticipates a rise in volatility and a possible significant BTC price increase by year's end due to factors like the Blackrock spot ETF ruling and the Bitcoin Halving, with Accumulators emerging as an effective strategy for accredited investors to acquire coins at discounted prices steadily," they wrote.

Elsewhere, Galaxy Digital’s Mike Novogratz recently said in an interview with Bloomberg that “the most important thing that happened this year in Bitcoin is Larry Fink,” emphasizing his boosted bullishness about the world’s largest digital currency following the asset management giant's spot bitcoin ETF filing.

“Larry was a nonbeliever," said Novogratz. "Now he says, ‘Hey, this is going to be a global currency.’ People around the world all trust it,” Novogratz added, while also mentioning that Galaxy Digital is committed to maintaining a presence in New York.

Novogratz also said that his ideal portfolio for a young person with risk tolerance is shares of Alibaba, silver, gold, bitcoin, and ether.

Meanwhile, Joe DiPasquale, the CEO of crypto fund manager BitBull Capital, said bitcoin’s ability to shrug off macroeconomic events, or even material technical events like the Curve Finance exploit, has created a recent “sustained sentiment shift” to the upside in the markets.

“Notably, now that the Fed's interest rate hike is also priced, the fact that Bitcoin and ETH have both maintained their price levels, should give bulls additional confidence,” DiPasquale wrote in a note to CoinDesk.

While not expecting “an overnight surge in the market,” DiPasquale sees 2024’s halving as the next major price spur. “Until then, bulls will do well to accumulate when opportune and bears may want to practice vigilant risk management,” he wrote.

Macro headwinds from Japan

The Bank of Japan (BOJ) last week softened its grip on the country's bond market, suggesting it would let yields rise beyond the tight 50 basis point limit it had previously set.. The yield on the 10-year Japanese Government Bond quickly rose to 55 basis points on the news and last night threatened to spike even higher, forcing the BOJ to intervene to temporarily cap the yield at 60 basis points.

The maneuver can potentially have wide-ranging impact on global markets and liquidity, including on the cryptocurrency asset class, which tend to be sensitive to global liquidity conditions, CoinDesk reported.

"The move is seen as a sign that the BOJ is preparing to put an end to its 30 year-long monetary policy easing which could have a significant impact on global liquidity," digital asset market research firm Kaiko noted in a Monday report. "BTC has historically moved in the opposite direction to global Treasury yields and bond volatility."