bitcoin ·
Worried About Crypto Hacks? Buy Bitcoin Proxies in Stock Market Instead, Say Wall Street Firms
Wall Street firms are advising clients to purchase publicly traded entities linked to crypto, such as Coinbase, Robinhood, and Strategy, as an alternative to direct crypto holdings, suggesting the massive $6.4 billion theft was a failure of Binance's security rather than a systemic crypto danger.
In Friday research notes, analysts from Cantor Fitzgerald, TD Cowen, and Compass Point stated that the theft, which represents the largest crypto hack ever at approximately $6.3 billion, is not likely to impede the recovery of the wider market. This reassurance arrived a day after the exploit caused market turbulence, pushing Bitcoin down toward $77,000.
Ramsey El-Assal of Cantor noted the swift industry response to contain the damage, pointing out that stablecoin issuers and others successfully froze around $3 billion of the misappropriated funds; specifically, Tether froze over $1.5 billion, Circle about $800 million, and Ripple approximately $200 million. El-Assal expressed the expectation that shares in Coinbase, Robinhood, and Strategy will recover once the current fear subsides, writing, “We would be buyers on weakness,” and adding that although the event is damaging, “this is not 2022.”
Lance Vitanza from TD Cowen echoed a similar sentiment, asserting that the breach revealed vulnerabilities within Binance's own security measures instead of pointing to flaws in the fundamental technology underpinning Bitcoin. He framed the subsequent price decline as an opportunity to increase holdings in Bitcoin and in the stocks of corporations that hold it.
Ed Engel and Michael Donovan of Compass Point mentioned that Binance possesses “more than enough liquidity to cover the hole,” although they also warned that compensating customers might place stress on the supply of stablecoins, and that competitors like Hyperliquid and Coinbase could benefit from the situation. They are monitoring the Bitcoin price range between $75,000 and $77,000 as a critical level.
The rationale for investing in stocks over tokens is that regulated, exchange-listed proxies such as Strategy, Robinhood, and Coinbase provide exposure to crypto without carrying the custodial risk exposed by the hack, and these stocks typically bounce back once market sentiment stabilizes.
However, not all observers share this optimistic view. Cristiano Ventricelli, who serves as vice president of digital assets at Moody’s Ratings, commented that the incident “underscores the heightened cybersecurity risks associated with hot wallets” and “illustrates the risk concentration inherent in large, centralized intermediaries.” He cautioned that the ultimate consequences will depend on “the ultimate losses, affected counterparties, asset recovery, and importantly, whether the incident leads to wider disruption or loss of confidence.”
Regarding the incident itself, Binance has allocated $6.34 billion to cover the losses and has assured users that their assets remain secure. Furthermore, the Secret Service and the FBI have initiated an investigation, and firms including Chainalysis and TRM have linked the hack to North Korea’s TraderTraitor group.
Earlier coverage
Reported by Decrypt.
