Cryptocurrency Market Takes a Hit
Bitcoin, the leading cryptocurrency, saw a decline of over 3% during early trading on Monday in Asia, dropping close to $87,000. Ethereum’s token, ETH, experienced a 5% fall, while other notable tokens like SOL, DOGE, and XRP also dropped more than 4%, based on data from CoinDesk.
This selling trend escalated shortly after Yearn Finance, a decentralized finance platform, raised an alarm about an “incident” involving its yETH liquidity pool. Despite this, its V2 and V3 vaults were reported to remain secure and unaffected.
Social media reports indicated that attackers exploited a vulnerability to mint large amounts of yETH in a single transaction. This led to a significant depletion of the liquidity pool, resulting in the theft of approximately 1,000 ETH, valued at around $3 million. YETH itself is a liquidity pool token composed of various Ethereum Liquid Staking Derivatives.
The protocol suffered a loss of $9 million during this exploit, with the stolen 1,000 ETH being sent to the mixer Tornado Cash. A blockchain security firm noted that the attacker’s wallet, identified as 0xa80d…c822, contained about $6 million in various tokens.
This incident follows closely after a multimillion-dollar hack of the South Korean exchange Upbit, underscoring the insecurity that still plagues the crypto market, especially as institutional investments continue to flow in.
During the early session in Asia, the market also experienced over $400 million in liquidations in leveraged cryptocurrency futures. This primarily affected long positions, signaling that many traders had anticipated a price recovery and were caught off guard by the sudden downturn.
November ended with Bitcoin suffering a 17.5% drop, marking its largest decline since March, although it briefly rebounded from nearly $80,000 to over $90,000 in the last week of the month. Ether, on the other hand, faced a 22% drop—the worst since February.
The dip in performance can also be attributed to considerable outflows from institutional investors. The Spot BTC ETF in the U.S. recorded net outflows amounting to $3.48 billion in November. This marked the second-largest redemption ever. Ether ETFs faced even worse with a historic outflow of $1.42 billion.
Updated explanations regarding liquidation and ETF results from November were added for clarity.
