This week was mainly bullish for crypto assets, particularly considering the stellar performance of major virtual currencies. The successful implementation of the Shanghai Update on Ethereum saw ETH, the native currency of the smart contracting network, break above $2,000 for the first time in 2023. Meanwhile, bitcoin (BTC) surpassed $30,000 as bulls spread the profits. Meanwhile, there was more positive news on adoption despite a discouraging wave of defaults and fraud that dented investor confidence.
A resurgence of hacks and fraud schemes
Terraport Finance, a decentralized finance (DeFi) project in the Terra Classic ecosystem, was hacked this week. The project, which featured a decentralized exchange, launched on March 31.
The team behind Terraport confirmed the attack on April 10, a few hours after several influencers in the Terra Classic community identified the incident. On-chain data suggested the hacker targeted Terraport’s liquidity pool, draining more than 15b terra classic (LUNC), 9.7 million TERRA, and an estimated 5.5 million USTC.
On the same day, GDAC, a crypto exchange in South Korea, was hacked for around $13 million. The funds, drained from a GDAC hot wallet, accounted for 23% of the platform’s total holdings. The exchange investigated the incident and reported it to local authorities.
Rashawn Russell, a licensed broker who previously worked as an investment banker for Deutsche Bank AG, was charged this week. He was charged with orchestrating a fraudulent scheme involving cryptocurrency investments and was arrested on April 11.
On April 13, circulating claims alleged that SyncDEX Finance, a DEX in zkSync, rebutted its investors and removed them as social media accounts. The rug flip reportedly saw liquidity providers lose 200 ETH.
Meanwhile, Yearn Finance, a yield farming platform, was the target of an exploit affecting its yUSDT token, which functions as the protocol’s proprietary USDT token. The attacker created up to 1.2 trillion yUSDT tokens by exploiting a misconfiguration in the yUSDT design. The illegitimately generated tokens were converted into other stablecoins, causing the protocol to lose $11.5 million.
A hack at Bitrue, a cryptocurrency exchange, closely followed the Yearn Finance exploit. On April 14, the exchange was hacked and lost SHIB, ETH, QNT, GALA, HOT, and MATIC, cumulatively valued at an estimated $23 million. Bitrue launched an investigation into the event, temporarily halted the withdrawals, and promised full compensation for the affected users.
Amid this spate of security breaches, Certik, a blockchain security resource, released a report detailing the recent wave of exploits that have hit the industry over the past week. Their analysis revealed that 27 such exploits had occurred since last Friday, resulting in a combined loss of $52.2 million. Among the breaches were 14 phishing attacks, four Discord exploits, and a Twitter hack.
Despite the spate of fraudulent activity and security breaches, the blockchain and digital asset industry saw a notable surge in adoption this week. Numerous private and government organizations were interested in reaping the benefits of the industry’s underlying technology.
On April 11, the Central Bank of Montenegro announced plans to partner with Ripple, a San Francisco-based technology company, to develop a central bank digital currency (CBDC) project.
Amid this growing interest in CBDCs globally, the International Monetary Fund (IMF) said there was a need to bring more clarity to the CBDC initiative, which would help drive adoption. To this end, the IMF revealed plans to publish a manual to guide and support CBDC developments.
The UK government also showed its willingness to take advantage of the promise of the blockchain industry. Reports indicated that the government wants to establish a new Department of Science, Innovation and Technology to oversee the country’s efforts to tap into the metaverse and web3 sectors.
A sharp uptick in adoption among private companies
In addition to government organizations, private entities are also interested. A notable example is ZA Bank, one of the major banks in Hong Kong. The bank announced plans to expand its services to include cryptocurrency-denominated accounts, allowing users to convert their assets between cryptocurrencies and fiat currencies.
Billionaire Elon Musk’s Twitter has also taken a step forward in its goal of accommodating digital assets. Twitter partnered with global trading platform eToro this week to allow users to trade digital assets and traditional stocks.
On April 12, Avalanche revealed that a number of top Wall Street firms would be leveraging its new subnet, dubbed Spruce, to explore the potential of Avalanche’s blockchain to improve various financial services, including trade execution, asset tokenization and liquidation.
More American Investors Jump Into Crypto
Meanwhile, this week’s research revealed that investors in the United States have become increasingly interested in digital assets of late despite the overall downtrend in 2022. The report revealed that nearly a third of US residents in the country invest in bitcoin and other digital assets.
Furthermore, a separate survey on April 11 found that the majority of US crypto investors are unfazed by market turmoil. The survey found that 69% of crypto investors continued to hold onto their assets despite unfavorable market conditions, with only 31% resorting to capitulation.
Ethereum volatility
Ethereum was bullish all week, mainly driven by anxieties and anticipation surrounding the upcoming Shanghai (or Shapella) update. Previously, Glassnode revealed that staked ETH deposits had declined slightly in the days leading up to the update, further compounding the uncertainty around ether performance.
With the update scheduled for April 12, fears grew among investors that the asset’s price would plunge as a result of significant beacon chain withdrawals. However, Glassnode forecast that only 1% of ETH staked would be withdrawn in the first week after the update.
Firm ETH Prices
On April 12, Ethereum developers completed the long-awaited Shapella upgrade, which triggered a rush of withdrawals from the network, resulting in 17,350 ETH in two hours. However, the ETH price remained resilient, rising 2.3% in the 24 hours to April 13.
The asset’s rally persisted, partly fueled by the bitcoin run over the same period. ETH recaptured the $2,000 price zone on April 13 before hitting an 11-month high of $2,128 on April 14.
The rally comes despite a report showing up to 292,000 ETH had been withdrawn 40 hours after the Shanghai update.
Bitcoin bulls are bullish
Earlier this week, the charts suggested that Bitcoin was poised for a big breakout. The asset was trading at $28,321 at the time.
Moments later, bitcoin rallied to $30,000 for the first time since June 2022. The asset rose to a high of $30,550 on April 11 before falling back to a low of $29,637 by the end of the week. This sudden downturn had a ripple effect on the broader cryptocurrency market, leading to a wave of liquidations worth approximately $98 million.
An April 13 report revealed that long-term bitcoin investors had embarked on a redeployment campaign, seeking to cash in on the asset’s latest rally to $30,000. An analysis of BTC price movements also indicated that a price correction could be in the offing for the asset in its current position.
However, several analysts remained optimistic, arguing that bitcoin’s upward trajectory is far from over. Bitcoin appreciated 6.8% this week, briefly reaching $31,000 before facing stiff resistance.
