Bitcoin Updates: DeFi Breach Highlights the Vulnerability of the Crypto Market

The cryptocurrency sector has been hit hard by a combination of technical failures, unclear regulatory signals, and a major decentralized finance (DeFi) hack, all of which have heightened investor anxiety.

plunged by 17% to $104,130 on November 4, 2025, resulting in more than $1.3 billion in forced liquidations and sending leading altcoins such as , , and into bearish territory, according to . The sharp decline coincided with a $128 million exploit targeting Balancer's Composable Stable Pools, which exposed weaknesses in DeFi infrastructure and intensified concerns about a possible systemic failure, as noted by . Market experts, including prominent crypto analyst Tom Lee, caution that it may take several weeks for stability and confidence to return, according to .

According to CoinCentral, Bitcoin's steep drop was driven by negative chart patterns, such as a head-and-shoulders setup and a death cross, both indicating sustained downward momentum. The coin also slipped below crucial support zones, including its Ichimoku cloud and rising channel, making $100,000 a key psychological barrier, as reported by . At the same time, the U.S. dollar index climbed to 99.80, its highest since August 1, further straining crypto’s inverse correlation with fiat currencies, CoinCentral observed.

Monetary policy from the Federal Reserve added to the uncertainty. Although the Fed reduced rates by 0.25% last week and intends to halt quantitative tightening in December, officials such as Austan Goolsbee have suggested pausing further cuts due to ongoing inflation worries, CoinCentral reported. This ambiguity has left crypto traders uncertain, as digital assets often benefit from looser monetary policy.

As the Crypto Fear and Greed Index dropped to 30, entering the "fear" range, panic selling accelerated, CoinCentral reported. Daily liquidations soared by 160% in a single day, erasing 327,790 traders—though this is still less than the 1.6 million liquidated during the October 11 crash, CoinCentral added. The memory of that event, combined with fresh volatility, has made traders reluctant to buy the dip, fearing more losses ahead.

The market’s vulnerability was worsened by a significant rounding error in Balancer’s smart contracts, which enabled attackers to siphon off $128 million across several blockchains, as first reported by Yahoo Finance. The breach, which affected only

V2 Composable Stable Pools, highlighted issues in automated market (AMM) protocols and raised fresh doubts about the safety of multi-chain liquidity solutions; Balancer’s response was covered by . Emergency measures, including hard forks and whitehat efforts, have managed to recover about $19 million, but the episode has undermined faith in DeFi’s robustness, according to .

Other DeFi projects also suffered losses. Stream Finance saw $93 million vanish after its

stablecoin lost its peg and dropped to $0.30, while Elixir’s deUSD crashed to $0.05 amid $400 million in withdrawals, as noted by . These incidents are reminiscent of the 2021 Luna meltdown, reigniting debates over the dangers of algorithmic stablecoins and leveraged trading, as previously discussed by Yahoo Finance.

Despite the turmoil, some market observers remain cautiously hopeful. Historically, crypto markets have managed to recover from steep declines, though the timing remains uncertain, according to

. Tom Lee and others stress that it may take weeks for the market to process the October 11 crash and the recent DeFi hack, as liquidity providers and institutional players reevaluate their risk, as mentioned earlier.

Currently, Bitcoin is trading near $103,000, with alternative coins lagging as risk aversion dominates, according to

. The path to recovery will depend on whether the Federal Reserve adopts more aggressive rate cuts, DeFi platforms strengthen their security, and retail investors regain trust in the market’s fundamentals. Until then, the crypto winter appears set to continue.

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