GM to the winners club. Crypto Nutshell Pro #103 curlin' up tight… 🦔🥜

If you’re new here, each Crypto Nutshell Pro is broken down into 2 sections:

The goal?

Help you understand exactly where we are in the cycle.

By now, you should have read through the following page: Read This First

(Click the button at the bottom of the page to continue the welcome series - there are 4 pages in total to read)

These give you a broad overview of the Crypto Nutshell Pro Portfolio and how we’re positioning for the rest of this cycle.

And in case you missed last week's Nutshell Pro, you can check that out here.

Now, let’s jump in…

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Bitcoin's at $77,200, down 4.3% on the week.

Ethereum's at $2,240, down 5.1%.

Until Thursday afternoon, Bitcoin was down less than 1% on the week, even after the Fed left a December hike in play on Wednesday.

Then hackers took about $6.3 billion from Binance, the biggest theft crypto has ever seen, and that accounts for almost all of the drop.

Given the size of the theft, the selling stopped well short of panic.

The hack also exposed a problem that was there before it, with long-term holders barely selling and hardly anyone new stepping in to buy.

That gap, more than the hack, is what decides November.

The money left Binance's hot wallets (the internet-connected wallets it keeps stocked to pay out withdrawals) from just after 4pm New York time on Thursday, after US markets had closed.

TRM Labs and Chainalysis tie it to TraderTraitor, the North Korean group behind last year's $1.5 billion Bybit heist.

Binance says it's set aside $6.34 billion of its own money to cover every loss, about $3 billion of the stolen funds has been frozen, and it's aiming to switch withdrawals back on this weekend, with a fresh proof of reserves due Monday.

Bitcoin went from about $80,700 just before the theft to around $76,400 on Friday, a drop of about 5%, and CoinGlass counted $1.56 billion of forced liquidations over 24 hours, $1.31 billion of them on traders betting it would rise.

We lined it up against the big exchange disasters of the past decade, measured from the last daily close before each.

Bitfinex lost roughly 120,000 Bitcoin in 2016, and Bitcoin fell 10% in two days.

A failed attack on Binance in March 2018 took 13% off in the same window, and FTX's collapse in November 2022 took 23%.

This one's the biggest theft on the list by a long way, and its two-day hit is smaller than all three of those, though bigger than Bybit's or Coincheck's.

Who owns Bitcoin now is the likeliest reason.

US spot ETFs hold about 1.3 million Bitcoin, roughly 6% of the supply, and none of it sits on Binance.

Galaxy's count of SEC filings shows nine hedge funds and banks that used ETFs for a low-risk trading strategy sold 68,000 Bitcoin worth of shares between last October and June, while sovereign funds like Mubadala and wealth managers bought.

The investors too small to file cut their holdings by just 6.6% while the price fell 49%.

Glassnode's figures point the same way, with the net losses holders lock in on each dip shrinking from $630 million in a day at the August low to $27 million around October 24.

The first two days don't settle it, though.

Coincheck lost about $530 million in January 2018 and Bitcoin barely moved for two days, then fell 19% inside a week.

Bybit's first two days cost just 2%, and the week cost 14%.

In both cases the market was already weak, and the hack became one more reason to sell.

Bitcoin's on track for its worst October since 2014, down 7.7% as of Friday on CoinGlass's figures, so the question is whether this hack turns out like those two.

Whether it does depends on who's left to buy, and right now that list is short…