Coin Value Plummets by 50% to 100% Six Months Post-Hack

The influence of a hack on a cryptocurrency’s value endures and amplifies over time, persisting for a minimum of six months following the event, as stated in the ‘Hacks & Token Prices Report 2024’ by the prominent bug bounty and security services platform Immunefi.

In conjunction with the report, the team is introducing a specialized platform that offers continuous insights into the actual financial repercussions of cryptocurrency hacks.

Factors Beyond Hacks Affect Coin Value

The report emphasized that the ‘net value stolen’ is the most commonly referenced statistic, yet it “significantly underrepresents the harm” caused by hacks.

While this figure is standard, it overlooks “additional ways hacks inflict damage.”

Many of these so-called “contributors to total hack damage” are challenging to measure but are more financially detrimental than the hack itself, according to the researchers.

The most overlooked contributors include market impact, dependency effects, and impacts on talent and organization.

Hack’s Effects Last Even Six Months After

The Immunefi team concentrated on the market impact—the harm experienced by token prices due to a hack, which can endure for extended periods.

It analyzed 176 hacks that took place between 2021 and 2023. Specifically, it examined the performance of the native tokens of the hacked protocols across five different timeframes: the day of the hack, two days later, five days later, three months later, and six months later.

Source: Immunefi

The researchers discovered that, two days post-hack, the median price of the native token experienced a 10% decline.

More specifically, 34% of the affected tokens dropped by 10%, 11.4% fell by over 50%, and 5.1% decreased by over 90%.

In the five days following the hack, the median token price reduction was 19%. At this point, more than 7% of the tokens had fallen by over 90%.

One month after the hack, the median token price drop was 27%. 9% of the monitored tokens’ prices decreased by more than 90%.

Source: Immunefi

The trend continued. Three months after the hack, Immunefi found that the median price had decreased by 43%. Now, 11% of the token prices had dropped by over 90%.

Finally, six months post-hack, the median token price decline reached 53%. Additionally, 16% of prices fell by more than 90%.

Among the observed tokens, ORT was the most impacted. Its price experienced the largest decline in the two-day, five-day, three-month, and six-month intervals – a complete 100% drop in each.

The BOG token surpassed ORT in the one-month period with its own 100% decrease.

A Hack Marks the Start of a Coin Value Decline

According to Immunefi’s Founder and CEO Mitchell Amador, “being hacked is the start of the damage, not the conclusion.”

“The millions lost due to the hack immediately foreshadow even greater losses, driven by market impact and dependency effects, along with many months of time lost in rebuilding your emotionally affected team and operations,” Amador noted.

Some of the most extreme instances of exploits resulted in losses of up to $625 million in a single attack, with coin values collapsing following the hack.

However, the Immunefi team aimed to explore the immediate market repercussions of a hack. Thus, the focus was on token prices two days after the incident.

It confirmed that the amount lost is “only a portion of the total damage.”

According to the report, “token prices experience significant declines following a hack, further exacerbating the losses specifically due to the market impact of the attack.”

Among the projects analyzed, Euler Finance’s EUL token recorded the most substantial loss within the first two days after its $197 million hack, with the price dropping 58% from $6.33 to $2.68.

Source: Immunefi

Other notable instances include Mixin Network’s XIN token declining 5% after a $200 million loss, Venus Protocol’s XVS token experiencing a 41% drop following a $200 exploit, and Ronin Network’s RON facing a 19.8% price decrease two days after its $625 million security breach.

BNBChain also encountered an exploit, suffering a $100 million loss. In the two days that followed, the BNB token experienced a 3.2% decline from $296.29 to $286.77.

Source: Immunefi

Significantly, one month after a hack, “an analysis of major hacks and their corresponding token price movements indicates that only the BNB token exhibited a notable price recovery.”

The other tokens did not rebound within one to three months.

“This further illustrates the enduring negative consequences of a hack on a protocol’s token price and market value,” the team concluded.

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