Bitcoin Shows Strength Despite Crypto Hacks

Bitcoin BTC/USD has reclaimed $23,000 this morning, which is a positive sign for bulls, as it means that the price is above the highly watched 200 weekly moving average (which sits at around $22,900). Bitcoin’s ability to hold above the 200 weekly moving average coincided with the S&P 500 falling 0.67% yesterday, which could be a sign of renewed interest in the crypto market relative to equities.

Furthermore, data from CoinShares show that Bitcoin-focused funds saw inflows last week totaling $85 million, whilst short-Bitcoin saw outflows of $2.6 million. This is the first week of outflows for the short-Bitcoin product after a 5-week run of inflows.

After June’s outflows of $481 million, this was almost fully corrected as the total inflows for July were $474 million. This is the biggest monthly inflow of 2022. As these funds are typically purchased by institutions and high-net-worth individuals, this is a signal that smart money is very interested in buying crypto at these prices.

Despite Bitcoin’s recent strength, there have been multiple hacks this week within the crypto ecosystem. This morning, there was a multimillion-dollar hack on the Solana network. The attacker drained at least $5 million worth of SOL/USD, SPL/USD, and other Solana-based tokens from the Phantom and Slope digital wallets.

In addition, a cryptocurrency bridge called Nomad, which lets users swap tokens between blockchains, was attacked on Monday. Almost $200 million of funds were drained.

Despite these hacks, the illicit activity relative to fiat currencies remains low. South African professor, Steven Sidley, claims “The number of transactions tied to illicit transactions in the real world of rands and dollars, where we live, is 5%. That’s 50 times higher than crypto (and those are the only ones we know about).” This was in response to the South African central bank deputy governor claiming that “90% of cryptocurrency transactions” are illicit. Even though Sidley is right, many smart contract platforms and bridges clearly have some way to go to become safe and secure for mainstream adoption.