Keeping your money in cryptocurrency tends to be a bit riskier than storing it in a bank, or as cash under your mattress. That's true even if you're invested in a relatively safer crypto investment, like Ethereum (ETH 0.88%), not to mention the smaller projects hosted on its chain.
When there's an unexpected problem in crypto that wouldn't happen in the traditional financial sector, it can sometimes be an opportunity to buy the dip, assuming that the problem won't be permanent.
Could this be the case for Ethereum today? It's very possible, so let's examine the latest happenings and put them into the context of the long-term case for buying the coin.
CRYPTO: ETH
Key Data Points
This may be the biggest crypto crime ever
Considering that Ethereum's price is down by 8% since Feb. 20, and by 10% over the last three years, it's arguable that the coin's current dip is more than temporary. But the decline since the 20th is due to one cause in particular: A hack of the cryptocurrency exchange Bybit, which occurred on the 21st. That's the dip that might be worthy of buying for the right investor.
Per the exchange's representatives, around $1.4 billion in funds were drained from its wallets, which held primarily Ethereum and a few derivatives of it. It's unclear whether the funds can or will be recovered, though Bybit has already restored most of its reserves so that it can continue to function as an exchange. Based on the available evidence, crypto cybersecurity group Arkham Intelligence has identified a North Korean hacker organization called the Lazarus Group as being the perpetrators, using a sophisticated software hack on a digital wallet service Bybit was using.
Does any of this actually detract from the investment thesis for buying and holding Ethereum, though? In other words, does this hack make it more likely that moving forward on a long-term basis, investors will be less likely to invest in the chain's decentralized finance (DeFi) projects, meme coins, artificial intelligence coins, and other projects?
No, it doesn't, though it is very reasonable to expect at least a little bit of near-term hesitancy from investors when it comes to buying the coin. Cryptocurrency exchanges get hacked and go down in flames fairly frequently, and scams and other fraudulent activity are common. That hasn't stopped the sector from growing over time, nor has it inflicted permanent damage to the chains where the most fallout landed in the past.
So the second-largest cryptocurrency probably isn't going to be knocked out of its position anytime soon, even after experiencing the largest episode of theft in the industry's history. That means the current dip is more likely to be an opportunity for buying than a harbinger of hard times ahead.
Take note of where the stolen cash is flowing
There's one additional wrinkle with the Bybit hack which is worth noting.
According to the analytics group WuBlockchain, the funds stolen in the Bybit hack were largely laundered by bridging them over to another chain, Solana (SOL 1.55%), where they were then used as fodder to launch meme coins. Then, a large collection of hacker-associated wallets were able to purchase the majority of the supply of those meme coins after they launched, and subsequently sell them to complete the laundering process. Why would this be the preferred way for the perpetrators to escape?
In short, it's very likely something that points to the reason why Solana is a better candidate for purchasing on the dip than Ethereum. Its price is down 15% since the hack, largely as a result of (probably temporary) weakness across the entire crypto sector.
CRYPTO: SOL
Key Data Points
When the hackers wanted to escape with as much of their ill-gotten proceeds as possible, they were incentivized to do so in a fashion that was both quick and cheap. Compared to Ethereum, Solana's gas fees are vastly lower, and its transaction times are much faster. When working with multiple wallets, as the hackers were, and when needing to do quite a few separate transfers, as the hackers did, those differences add up to be financially meaningful.
Here's the thing: Those same differences between the chains are meaningful for everyone, including investors, traders, and blockchain developers. It's never more convenient to pay more money to transact and wait longer for your actions to be confirmed on the chain. That's a big part of the reason why Solana is winning against Ethereum in emerging segments like infrastructure for AI agents, and why it could potentially continue to eat its lunch for years to come as well.
So if you were thinking about buying the dip with Ethereum, it isn't a bad idea to do it. An even savvier idea is to buy Solana's dip. Just prepare to hold your new tokens through thick and thin for a few years, in the unlikely event that the price drop lasts that long.
