Ethereum drops 9% after multi-million dollar DeFi protocol hack

The Ethereum cryptocurrency exchange rate fell 9% on Nov. 3, dropping below the key $3600 level. The collapse came amid news of a hack of the Ethereum-based Balancer decentralized financial protocol (DeFi) for allegedly more than $100 million, CNBC reports. DeFi protocols are automated services for financial transactions running on blockchain without intermediaries.

The Balancer hack was the latest in a series of bearish events that have kept investors in the digital asset market on edge over the past few weeks, the channel noted. According to cryptocurrency exchange Binance, the second most capitalized cryptocurrency is now trading at $3645 - a quarter below the all-time high of $4885 reached on August 22.

Against the background of the cryptocurrency market decline, shares of related companies also fell in price. On October 3, shares of cryptocurrency exchange Coinbase fell by almost 4% in New York, while shares of Strategy, the largest corporate bitcoin holder, fell by almost 2%.

On October 31, 10x Research founder Markus Thielen suggested hedging bitcoin investments with bets on Ethereum's decline due to weak demand and capital constraints from large buyers, Coindesk wrote. "Our altcoin model still points to the attractiveness of shorting ETH vs. longing BTC," Thielen wrote. According to Thielen, traders are increasingly buying put options on Ethereum, signaling growing fears of further declines.

In mid-October, US President Donald Trump's statements about "sweeping" tariffs against China triggered a flight of investors from cryptocurrencies to protective assets such as gold. Additional pressure on the market was exerted by comments from the head of the US Federal Reserve Jerome Powell, who last week warned investors against confidence in further rate cuts, CNBC notes.

This article was AI-translated and verified by a human editor