Binance Security Breach Sparks $1.57B Liquidation Surge Across Crypto Markets

Bitcoin struggled to recover above $77,350 as the fallout from Binance’s estimated $6.3 billion security breach triggered $1.57 billion in cryptocurrency futures liquidations and pushed major digital assets lower.

BTC briefly dropped to $76,400 overnight, reaching its lowest level since Sept. 18, after Binance, the world’s largest cryptocurrency exchange, suffered the exploit. Blockchain intelligence firms TRM Labs and Elliptic attributed the attack to North Korean-linked hackers.

The cryptocurrency later recovered some losses, while Ether (ETH) rebounded toward $2,220 after briefly touching $2,170.

Around $3 billion in stolen assets have reportedly been frozen. Binance has also paused withdrawals as it responds to the incident.

The broader market decline coincided with weakness in technology stocks. Nasdaq-100 futures slipped 2.3% after Amazon (AMZN) raised its capital expenditure outlook, while Intel (INTC) plunged approximately 25% following disappointing earnings guidance.

Before the exploit occurred, U.S. spot bitcoin ETFs attracted $17 million on Thursday, marking their fourth consecutive day of net inflows, according to Farside Investors.

Binance Exploit Triggers $1.57 Billion in Futures Liquidations

Liquidation activity surges: Forced closures across crypto futures markets climbed fourfold to $1.57 billion following the sharp market decline. Trading volume increased 74% to $346.1 billion, while open interest fell 3% to $136.3 billion. The decline in open interest suggests traders were closing leveraged positions and withdrawing capital from derivatives markets. The taker buy-sell ratio also shifted slightly toward selling after remaining balanced during the previous session.

Bitcoin and ether show contrasting derivatives flows: Bitcoin declined 3.1% over 24 hours, but open interest dropped only 1.4%, suggesting a small amount of capital entered BTC futures during the selloff. Ether fell 4%, while its open interest contracted 5.8%, indicating money was leaving ETH derivatives.

BTC funding rates remained positive and moved higher, meaning long traders continued paying short sellers to maintain their positions. ETH funding also stayed positive but decreased, suggesting its bullish bias was weakening.

Together, bitcoin and ether accounted for more than half of total liquidations, with $522 million in BTC positions and $361 million in ETH positions forcibly closed.

SOL and NEAR experience derivatives outflows: Solana’s (SOL) open interest declined 13.3% alongside a 3.3% price drop, pointing to substantial capital leaving its futures market. NEAR traded relatively flat, but open interest fell 11.8%, extending its outflow trend for a second consecutive day.

Both tokens recorded negative funding rates, indicating that short traders were paying long holders. Their cumulative volume delta (CVD) readings were also negative, reflecting greater selling activity through market orders.

BNB derivatives activity remains elevated: BNB declined 6.2%, the largest loss among major cryptocurrencies, despite its dollar-denominated open interest remaining largely unchanged. Trading volume more than tripled. Negative funding showed that short positions were paying longs, while negative CVD indicated that market sellers remained dominant.

HYPE gains as other markets retreat: HYPE advanced 15%, while open interest increased 28%, suggesting fresh capital entered its futures market during the broader downturn. Trading volume jumped nearly eightfold.

Its positive funding rate increased, indicating that long traders were paying more to maintain their positions. Positive CVD readings also showed that market buying orders outweighed selling activity.

Funding rates point to divided market sentiment: Positive funding remained widespread among major cryptocurrencies, meaning long traders were paying shorts. However, BNB, SOL, NEAR and TRX moved into negative funding territory, where short traders compensate long holders.

TRX recorded the most negative funding overnight, while Monero (XMR) had the highest positive rate, followed by HYPE.

Selling pressure dominates most major tokens: Negative 24-hour open-interest-adjusted CVD readings appeared across nearly all major cryptocurrencies. TRX, HYPE, ZEC, XMR and BCH were the exceptions, suggesting market sell orders outweighed buying activity across the wider market.

Options traders increase bearish protection: Five of the six most actively traded bitcoin options were put contracts with strike prices below the current BTC price. The $74,000 put expiring Nov. 13 recorded the highest volume.

Ether options showed an even stronger preference for puts. A $2,000 put with the same expiration date traded at more than twice the volume of any other ETH option, while just one of the six most-active contracts was a call.

Put-option demand rises across both assets: The 25-delta skew, which measures the relative cost of puts compared with calls, increased across every measured time frame for bitcoin and ether. This points to stronger demand for protection against further price declines.

Thirty-day implied volatility indices also spiked during Asian trading as the Binance incident encouraged traders to purchase puts, although some of the increase was subsequently reversed.

Tokens Associated With Hacker Selling Lead Recovery

Cryptocurrencies reportedly held and sold by the Binance attacker outperformed during the market rebound. Ethena (ENA) climbed 8.4%, Pepe (PEPE) gained 7.3%, Uniswap (UNI) increased 4.6% and Chainlink (LINK) advanced 3.7%.

Uniswap and Aave had previously lost approximately 11% on Thursday as the attacker converted assets into ether, according to Lookonchain.

Aave (AAVE) and Arbitrum (ARB) later recovered around 4.5%. Aave had suspended lending markets across 16 networks after the exploiter borrowed roughly $44.6 million worth of ether using stolen USDT as collateral.

Thorchain (RUNE) rose 6.2% after Elliptic and onchain investigator ZachXBT traced some of the stolen funds into Ethereum through the cross-chain protocol.

LayerZero (ZRO) jumped 12%, leading the CoinDesk 100 index. Curve (CRV) fell 7.2%, while Tron (TRX) declined 4.9%.

Market sentiment indicators also weakened. CoinMarketCap’s Altcoin Season Index dropped to 45 from 54 on Thursday, while its Fear and Greed Index slipped to 36 from 43, remaining in the “fear” category.