Cryptos Tumble Again Amidst Hack And Hike

By RTTNews Staff Writer | Published: 2/3/2022 9:34 AM ET

Cryptocurrencies tumbled again on Thursday, registering a loss of more than 5 percent compared to 24 hours ago. Investors weighed in the interest rate hike decision by Bank of England and status quo by ECB amidst bond yields that firmed up in response to the decisions. Another major heist in crypto space also impacted sentiments.

Solana (SOL) and Avalanche (AVAX) have dropped more than 10 percent.

Ethereum (ETH), Terra (LUNA), Polkadot (DOT), Dogecoin (DOGE), Polygon (MATIC), Crypto.com coin (CRO) and Cosmos (ATOM) have dropped between 5 and 10 percent.

Bitcoin (BTC), BNB (BNB), Cardano (ADA), XRP (XRP), SHIBA INU (SHIB), Wrapped Bitcoin (WBTC) have declined less than 5 percent.

Down the hierarchy, extraordinary price momentum is noticed in 37th ranked Tezos (XTZ) which has gained 2.48 percent, 59th ranked Quant QNT which has gained 9.14 percent, and 95th ranked Immutable X (IMX) which has surged a whopping 25 percent in the past 24-hours.

The IMX rally is in the backdrop of GameStop and Immutable X planning an Ethereum gaming NFT marketplace with $100 million fund.

Bitcoin is trading at $36,561.74 whereas Ethereum is trading at $2,605.84.

Stablecoin dominance increased to 10.33 percent versus 9.76 percent on Wednesday.

In another instance of DeFi hack, Wormhole Portal, a platform that helps users transfer cryptocurrency between the Solana and Ethereum blockchains, on Wednesday informed that a hacker had stolen more than $325 million worth of tokens.

Wormhole is a communication bridge between Solana and other top DeFi networks allowing existing projects, platforms, and communities to seamlessly move tokenized assets across blockchains. The bridge between chains, which holds roughly $1 billion in deposited funds was exploited for 120k wrapped Ether, a token that tracks the price of Ethereum.

Blockchain analytics company Elliptic, has called the incident the fourth largest cryptocurrency hack ever, whereas blockchain security firm CertiK said the hack represented the largest-ever attack on the Solana network. Wormhole has since confirmed that the vulnerability has been patched.

Solana is currently trading at $96.49, down 11.75 percent in the past 24 hours.

The DeFi space is currently at $122 billion, commanding a dominance of 7.24 percent in the overall crypto market. The top ranked cryptos of the category are Terra (LUNA) aggregating $19.9 billion, Avalanche (AVAX) totaling $16.2 billion and Wrapped Bitcoin (WBTC) adding up to $9.7 billion.

Total value locked (TVL), the overall value of crypto assets deposited in DeFi protocols is $198 billion, led by Curve (CRV) at $17.8 billion, Maker DAO (MKR) at $15.7 billion and Convex Finance (CVX) at $12.3 billion. TVL includes all the coins deposited in all of the functions that DeFi protocols offer, including staking, lending and liquidity pools.

Meanwhile, in a win for cryptocurrency stakers and miners, the IRS has reportedly agreed that tokens attained through proof-of-stake protocols are taxpayer-created property and would not be taxed until sold or exchanged. It has also offered to refund the taxes if any, paid on rewards gained, but not redeemed in a specific case that was appealed.

In a related development, the U.K. tax agency has released a set of guidelines that could impact the DeFi category activities. According to the guidance, returns via staking and lending of DeFi assets would not be treated as “interest” as digital assets in the UK are considered as property for tax purposes and not as currencies.

The recent crypto heist is bound to increase the clamor for greater regulation of the crypto space, particularly DeFi or Decentralized Finance. According to blockchain analytics company Elliptic, there has been more than $2 billion in direct losses suffered by decentralized finance services due to hacks and exploits. Whether the losses in such heists are eventually recovered from the hackers, as was with the $600 million Poly Network heist or made good by the service providers, the existence of such vulnerabilities definitely raises alarm bells.

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Article written by an RTT News Staff Writer, and posted on the RTT News.com website.

Article reposted on Markethive by Jeffrey Sloe