Bitwise chief investment officer Matt Hougan wrote on November 4 that the record $6.3 billion hack of Binance is unlikely to have a lasting effect on the Bitcoin market, pointing to historical data on how the asset has performed after the largest exchange thefts.

In a memo published by Bitwise, Hougan examined Bitcoin's price in the 30 days following the 10 biggest crypto thefts in history, including Binance's. Five of those episodes ended with Bitcoin higher a month later; five ended lower — a split record showing no consistent one-month direction for Bitcoin after major thefts. He credited the methodology to David Lawant, his former colleague who now heads research at Anchorage Digital.

The memo arrived six days after the October 29 breach of Binance, the largest cyber-theft in history in dollar terms and roughly four times the size of the previous record.

Bitcoin's initial reaction was muted: the asset fell about 4% in the day after the attack, broadly in line with the Nasdaq-100's roughly 3% decline on October 30, and traded largely flat through November 3.

Theft damages the exchange, not the asset

Hougan argued that theft leaves the underlying asset undamaged. Supply remains capped at 21 million coins, the network continues to run, and major institutions continue to hold Bitcoin. In the asset's 17 years of existence, no one has ever stolen coins by hacking the blockchain itself.

"Bitcoin wasn't hacked last week. Binance was," Hougan wrote.

In his reasoning, hacks would rattle prices only if there were no safer way to hold Bitcoin, and he maintains there is one.

Hot wallets were the point of entry

The stolen funds sat in Binance's online "hot wallets," which exchanges use to process deposits and withdrawals quickly and which are, by design, the least protected part of the system. Attackers appear to have gained access through an employee's laptop.

On November 4, Binance stated that approximately 98% of the affected assets had been restored from its own reserves, with the remainder being repurchased in the open market and over the counter.

With the apparent entry point an employee's laptop and the stolen funds held in online wallets, Hougan suggested investors weigh three custody options: institutional custodians, personal cold storage, and spot Bitcoin ETFs. He views ETFs as distinctive because a qualified custodian holds their assets offline. At Bitwise, coins do not leave cold storage without sign-off from multiple people, and transfers can go only to a restricted set of pre-approved market-maker addresses. Because the Bitcoin behind an ETF moves once a day, he pitched ETFs to long-term holders.

TD Cowen's Lance Vitanza reached a similar conclusion, writing that the hack exposed weaknesses in Binance's security rather than in the underlying technology, as Cryptopolitan reported. "We do not stop using dollars when a bank is robbed, just as car theft does not invalidate the automobile," Vitanza wrote.

Market reaction

Bitcoin closed up about 4% at $80,405 on November 4, while Ether (ETH) gained about 7% to $2,422. The rally followed the November 3 U.S. midterm elections, which gave Democrats control of both chambers of Congress. Shares of Strategy and Coinbase leapt about 5% and 4%, respectively.

Matt Mena, crypto research strategist at 21Shares, observed that the record hack jolted prices less than past crises have. He is watching whether Bitcoin holds between $76,000 and $78,000 and whether ETF inflows restart. Alongside those market markers, the completion of Binance's open-market and over-the-counter repurchases for the remaining affected assets, as outlined in its November 4 statement, is a concrete follow-up item.

Hougan's longer-term bull case rests on continued institutional demand for the asset.