We keep hearing the news about crypto exchange and wallet hacks, which can sometimes shake the cryptocurrency industry down to its core. There are some factors to consider when you face the hacks yourself.
Crypto exchange and wallet hacks make the market really bearish. So why is the market sentiment so sensitive to this kind of news?
Loss of investment. Investors may leave the market after a hack because they do not have any readily available funding to build a new portfolio or lose their trust in the asset and platform. Whatever the reason behind this decision is, a coin loses its fans, and its rates move down. This is especially relevant for the coins that do not enjoy huge popularity.
Cautiousness. Some investors are so risk averse, that they leave the market even if their assets were not impacted by the hack. It seems they decide that if one stock exchange or wallet is unsafe, theirs may be no less risky, and it is better to deposit their money in a bank account.
Group thinking. Cryptocurrency investors enjoy sharing their thoughts and impressions with the community, and sometimes the level of anxiety rises so high that it starts prevailing over logics, investors begin to see only negative sides of a coin and sell it.
Loss of trust. Cryptocurrencies are a brand new type of asset, and their rate is largely determined by investor trust at this stage. Hence, the more they conquer the market and the more good news there is about them, the higher the rate is, and vice versa, the more negative news comes out, the lower the rate sags.
Traders’ policy. When news on a hack emerges, cryptocurrency traders start speculation for a fall: they are happy to purchase a coin at a low price. They try to contribute to the downturn - some of them sell large amounts of assets, others advise investors to urgently sell their coins.
Keep or hodl?
When you hear that a crypto exchange or wallet have been hacked, do not be in a rush to get rid of all your crypto assets.
Find answers to the following questions:
Was there any hack at all? It was probably just an attempt to hack. Visit any official channel of the exchange or wallet (for instance, a Telegram account) and find out the truth. Or ask its developers directly.
How much is the loss? Use only official sources to find out the number. If this hack is somewhat related to your investment, try to withdraw the funds or transfer them to a different platform.
If the hack has nothing to do with your investment, then try to find out if your portfolio includes any coins that may collapse and never get back, try to get rid of such assets.
Overall, leading cryptocurrencies tend to recover after hacks, as they do not lose their value only because of incidents on third-party resources. So even if your crypto exchange or wallet did not get back on their feet, choose a more reliable platform, wait until the craze abates and continue to work with cryptocurrencies just as before.