Why bitcoin held up better after the record Binance hack

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Binance has suffered the biggest hack in crypto history, but that's done little to shake confidence in bitcoin, according to market analysts and researchers.

On Thursday, the world's largest exchange by daily trading volume said that roughly $6.3 billion were affected in an exploit. Security firm TRM Labs linked the security incident to North Korea. 

The hack sparked a slight sell-off in bitcoin. On Friday, the cryptocurrency traded at $77,065 around 1:34 p.m. ET, down about 4% on the day.

Bitcoin in the past day

By comparison, the token has fallen 8.3% on average in the first 24 hours following past crypto exchange exploits, according to data from institutional crypto platform Anchorage Digital.

The digital asset has remained relatively resilient because the hack on Binance had nothing to do with the security of the bitcoin network itself, according to Sam Callahan, director of bitcoin strategy and research at crypto treasury firm OranjeBTC. 

"Investors recognize an important distinction: Bitcoin itself was not hacked," Callahan told CNBC. "This was a security breach at a centralized exchange, not a failure of the Bitcoin network."

Binance hack isn't first to batter bitcoin

Although Binance has suffered the largest hack in crypto history, it's far from the only digital asset exchange to fall victim to bad actors and lead bitcoin to tumble.

In the early 2010s, bitcoin exchange Mt. Gox was hacked a handful of times, wreaking havoc on the price of bitcoin. The token fell as much as 23.7% in the first 24 hours after an attack on Mt. Gox in February 2014, per Anchorage Digital data.

More recently, crypto exchange Bybit suffered roughly $1.5 billion in losses due to an exploit targeting its trading platform. Last month, crypto platform Bitget was drained of more than $350 million in digital assets.

What's different about the Binance hack is that it hasn't sparked the same loss in confidence in crypto markets that occurred after other major crypto security incidents, according to Spencer Hallarn, head of markets at crypto trading firm GSR.

Binance said it has started recovering affected assets, which has likely assuaged some of investors' concerns, according to Spencer Hallarn, head of markets at crypto trading firm GSR. 

"The speed of Binance's response, its deep financial resources, and its assurances that no user funds would be lost have helped restore market confidence and prevent potential panic," Hallarn told CNBC. 

Tether, Circle and several other crypto firms said they had frozen roughly $3 billion in funds stolen in the heist. That should help mitigate losses tied to the attack, the executive noted.

Binance also has a $1.2 billion Secure Asset Fund for Users to offset losses from security breaches and other events. The firm could also be eligible for loans that would minimize its solvency risks, if history is any indication, according to investment bank Compass Point.

"We believe Binance has more than enough liquidity to cover the hole and we expect the exchange to remain solvent while reimbursing user funds," Compass Point analyst Ed Engel said Friday in a note to clients. "ByBit also received a bridge loan after its $1.5bn hack last year; therefore, we believe Binance has financing options."

GSR's Hallarn noted that this latest rotation out of technology stocks may also be to blame for some of the pressure on bitcoin. 

"Since the exploit, bitcoin has largely traded in lockstep with other risk assets, including equities, which sold off overnight amid concerns over AI-related earnings," Hallarn told CNBC. 

The iShares A.I. Innovation and Tech Active ETF (BAI) was down more than 8% on the day. 

Still, Anchorage Digital head of research David Lawant noted that current holders of bitcoin are more likely to hold their tokens through short-term headwinds than holders of other risk-on assets at the moment. 

Just 6% of bitcoin is held in exchange-traded funds, according to data from bitcoin analytics platform Bitbo. That suggests many bitcoins are still being held by long-term believers in the asset and its cyberpunk origins, Lawant said. 

"Bitcoin and crypto are not these hot-topic [assets like tech stocks] that investors are fleeing in and out," Lawant said. "The current holder base is a pretty strong one that is able to look at these things with a slightly longer-term view. That's playing a big role in how bitcoin is behaving well in this negative market environment."