Home / Capital & Crypto / Hacked Exchange Binance to Resume Withdrawals and Deposits, Could Spark Raging Crypto Rally

Hacked Exchange Binance to Resume Withdrawals and Deposits, Could Spark Raging Crypto Rally

Last Updated March 4, 2021 2:31 PM
Joseph Young
Last Updated March 4, 2021 2:31 PM

By CCN.com: The world’s largest crypto exchange Binance, which temporarily paused deposits and withdrawals following its high profile hack that resulted in the loss of around $49 million worth of bitcoin, is set to fully resume deposits and withdrawals on Tuesday.

On May 10, Changpeng Zhao, the CEO of Binance, stated in an official update that the exchange is planning to resume deposits and withdrawals early next week, and the company is on schedule in reopening the platform subsequent to a relatively large security breach.

For Binance, the 7,000 BTC hack seemingly poses virtually no threat to its operations and the exchange is expected to recoup the $49 million it lost in less than two months considering its profit in the first quarter of 2019.

As Binance reopens, some traders have suggested that it could fuel the rally of alternative crypto assets, or altcoins, especially if the bitcoin price begins to demonstrate a sideways movement in the near-term.

Will Binance Resumption Trigger a Crypto Rally?

In the past month, the bitcoin price has increased by 45 percent against the U.S. dollar, recording a staggering 90 percent rise year-to-date.

Historically, a large bitcoin rally has led other major crypto assets and tokens to regain momentum as the interest in the asset class surges.

Crypto asset traders expect to see investors reallocate some of the capital from bitcoin to more risky options as confidence towards the short to medium term sustainability of the market increases.

bitcoin price, crypto
Bitcoin has broken through the $7,000 mark | Source: CoinMarketCap

“Binance aiming for Tuesday to fully resume deposits and withdrawals. I suspect altcoins will have a very green day,” one trader said.

According to Bitwise Asset Management’s report released in March, Binance accounts for roughly 40 percent of all global bitcoin trading.

Hence, it would not necessarily be far-fetching to expect the resumption of Binance’s operations to have a major impact on the landscape of the altcoin market at least in the near-term.

“The local top for both BTC and BTC Dominance appears to be in. We’re looking at some insane ALT pumps as money flows from Bitcoin into ETH and other crypto [assets]. Can you imagine Monday as we see Binance open to fresh bank wires coming in and mainstream media going nuts?” another trader said .

Significant Revamp of Security Measures

In its latest update, the Binance team and Zhao said that the exchange will reopen with many advanced security features added to prevent a similar security breach from occurring in the future.

Zhao said :

Our team is making progress and has been working through the weekend. In the past few days, we have made some significant overhauls to our system, with a large number of advanced security features added and/or completely re-architected.

We will share details on some of the changes later. We aim to fully resume deposits and withdrawals on Tuesday. The time will be communicated at a later stage, depending on how the testing goes.

Although the high profitability of Binance would have allowed the company to comfortably cover the losses from the hack with corporate funds, the proactive efforts of Binance to establish an insurance fund in late 2018 in an unlikely event of a security breach likely led investors to demonstrate more confidence in the ability of the exchange to recover from the hack.

The security breach of Binance’s hot wallet will likely serve as a warning to all major exchanges that as the crypto sector grows, hackers will attempt to utilize a wider range of sophisticated tools and methods to steal funds,