Week in review: Christmas lull and the Trust Wallet user hack

Christmas lull, $7m Trust Wallet hack, mining difficulty steadies, Aave’s rift widens.

The crypto market moved sideways over Christmas; losses from a hack targeting Trust Wallet users reached $7m; bitcoin mining difficulty halted its slide; and other news of the week.

A holiday pause

In the Christmas week (Catholic Christmas is celebrated overnight from 24 to 25 December) the crypto market paused: volatility subsided and prices barely moved.

On Monday, 22 December, bitcoin attempted to hold above $90,000, but once again failed.

It then retreated to $87,000. For the rest of the week, the digital gold traded in a $86,000–89,000 range.

At press time bitcoin is about $87,900, down roughly 0.5% over the week.

The rest of the crypto market was equally subdued. Ethereum stayed near $3,000.

Among the ten largest assets by capitalisation, XRP and DOGE fell the most, losing 3.3% and 5.8% respectively over the week.

Amid worsening sentiment and ebbing demand, CryptoQuant analysts suggested the market could be entering a bear phase.

They expect a bottom near the realised price—around $56,000—implying a 55% drawdown from the all-time high. Interim support sits near $70,000.

Meanwhile, the popular market sentiment index is stuck in the “extreme fear” zone. It has been there since 13 December.

By week’s end, total crypto-market capitalisation stood at $3.06trn. Bitcoin’s dominance was 57.3%, Ethereum’s 11.6%.

Trust Wallet’s troubles

Late on 25 December, reports began to surface of hacks targeting Trust Wallet users.

On-chain sleuth ZachXBT was among the first to flag the incident, naming the latest update to the Chrome extension as a possible cause.

A cybersecurity specialist going by Akinator found a malicious script in the upgrade that covertly transmitted wallet data to a phishing resource.

The TrustWallet team confirmed the incident. Hundreds of users were affected and losses totalled about $7m.

“I was coming back from a family holiday. I wanted to check the markets, maybe find opportunities in the New Year dip. Instead, I opened the wallet and saw that $300,000 were gone. […] Everything I had worked for. Stolen right at Christmas,” one victim said.

Lookonchain analysts identified the hacker’s addresses; $4.2m had already been transferred to ChangeNOW, FixedFloat, KuCoin and HTX.

Binance founder and TrustWallet owner Changpeng Zhao assured that the project would reimburse losses in full.

Prediction platform Polymarket also experienced a security incident this week. Users complained about unauthorised login attempts and zeroed balances.

Project representatives pointed to a vulnerability at a third-party provider, without specifics. Judging by comments online, the problem affected customers who used Magic Labs for authentication.

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Mining difficulty stabilises

On 25 December, mining difficulty for the leading cryptocurrency rose by a marginal 0.04% to 148.26 T—yet the uptick broke a six-week decline.

After hitting an all-time high of 155.97 T on 29 October, difficulty posted three consecutive declines: 2.37%, 1.95% and 0.74%.

Even so, hashrate during the drawdown held above 1 ZH/s. According to Glassnode, the seven-day moving average sits around 1.06 ZH/s.

In TheMinerMag’s view, the muted rise in difficulty suggests recent reductions in network computing power have not materially affected miners’ operations.

Bitcoin’s hashrate decline proved temporary, although VanEck analysts even declared a miner capitulation, with operators switching off unprofitable equipment.

By TheMinerMag’s estimates, the network’s difficulty has corrected by roughly 4% from the peak. Over the same period, the coin lost about 20%. Historically, such a divergence has tended to flush out weaker players.

“So far such a capitulation has not materialised. The limited decline in difficulty and the stability of hashrate indicate that the network is coping with economic stress without large-scale shutdowns,” the experts stressed.

Meanwhile, hashprice remains low at around $38 per PH/s per day, pressuring mining economics.

AAVE’s “civil war”

This week tensions flared within the Aave community over control of the brand, domains and public channels.

The fight pits the project’s DAO against the centralised developer Aave Labs. The conflict began with a contentious deal in early December.

Ave Labs announced a partnership with CoW Swap purportedly to improve swap pricing and protection. It later emerged, however, that fees from the updated swap contracts were being sent to a wallet controlled by the developer.

The decentralised organisation thus lost most of its revenues.

Marc Zeller, the largest delegate and a community activist, called the situation a covert privatisation of the project. By his calculations, the DAO potentially lost about $10m in annual revenue due to the firm’s actions.

On 16 December, former Aave Labs CTO Ernesto Boado presented a proposal that favoured the DAO.

Aave Labs put the initiative to a preliminary community vote starting 23 December. It listed Boado as the sole author, though he did not participate in the coordination.

In the end, Aave ecosystem participants rejected the proposal. Voting ended on 26 December: 55.29% against, 41.21% abstained and only 3.5% in favour.

Meanwhile, Aave co-founder Stani Kulechov faced criticism after buying $10m worth of the project’s tokens. He was suspected of manipulating the vote.

Researchers also found that the three largest addresses controlled more than 58% of the vote. The leading wallet held 27% (333,000 AAVE), and the address linked to the Aave Chan Initiative—18.5%.

Amid the discord, AAVE lost 12% on the week. The token briefly fell from $176 to $148, before recovering to $155.

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An uneasy DAT firm

ETHZilla, a crypto treasury backed by Peter Thiel, sold 24,291 ETH for $74.5m ($3,068 per coin) to meet debt obligations. The proceeds will go towards buying back outstanding convertible bonds.

The firm retains about 69,800 ETH worth $206m.

This is the second sale of tokens by the DAT company since late October. The first time, the firm sold $40m worth of assets.

According to ETHZilla representatives, the company intends to keep selling coins until mNAV stabilises.

Amid the Ethereum “dump”, the firm’s shares fell 8.7% in a day. Since the start of the year, the price has plunged by more than 65%.

Meanwhile, the largest corporate holder of Ethereum—BitMine—kept accumulating, buying 13,412 ETH for $40.61m this week. The company’s treasury already exceeds 4m ETH ($12bn).

“BitMine continues to steadily build its Ethereum reserve; over the past week the company added 98,852 ETH, and now its holdings exceed the critical threshold of 4m ETH. This is a tremendous milestone, achieved in just five and a half months,” said chairman Tom Lee.

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