Virtual Asset Market Shows Instability Amid U.S. Liability Ceiling Negotiations, Mt. Gox Concerns, and Year-End Market Fluctuations

From December 23 to 27, the virtual asset market exhibited significant volatility due to the difficulties in the U.S. liability ceiling negotiations

The virtual asset market exhibited significant volatility from December 23 to 27 due to difficulties in the U.S. liability ceiling negotiations, concerns over sales stemming from Mt. Gox, and year-end supply and demand instability. It attempted to rebound following the news that President-elect Donald Trump appointed Bitcoin supporter Steven Miran as head of the economic advisory council, but continued to decline due to institutional adjustments in their spot exchange-traded fund (ETF) positions and low liquidity caused by the holiday season.

Bitcoin is trading around $95,000, down 1.9% from the previous week, while Ethereum is trading around $3,300, a 2.55% decrease. Continuing from last week, the Bitget Token (BGB) recorded a significant increase of 60.65% following the news of its merger with Bitget Wallet, and the Virtual Protocol (VIRTUAL), leading the AI agent sector, also showed strength with a 32.26% increase.

Choi Seung-ho, from the Research Institute, noted, "Amid weakened short-term upward momentum following Chairman Powell's hawkish remarks last week, the market appears unstable due to year-end closures and institutions halting transactions. However, increasing volatility at year-end is a typical pattern that has been repeated annually."

◇ Bitcoin strategic reserves, U.S. liability solution emerges

VanEck is drawing attention by proposing a solution for U.S. liability through Bitcoin strategic reserves. VanEck analyzed that if the U.S. strategically accumulates 1 million Bitcoins, it could reduce the national liability by about 35% by 2049. This assumption is based on an annual average Bitcoin price increase rate of 25% and a current U.S. liability of $37 trillion, which is expected to grow by 5% annually.

This proposal is attracting attention because the U.S. has previously used strategic petroleum reserves for fiscal improvement. Since the Bipartisan Budget Act (BBA) in early 2015, the U.S. has sold strategic reserves multiple times to secure finances. Notably, there is growing anticipation for a solution to the liability through Bitcoin’s strategic reserves, especially as some speculate that Trump could issue an executive order designating Bitcoin as a strategic reserve asset on his first day in office.

However, there seems to be a need for reflection on the essential purpose of strategic reserves. While oil has been stocked with a clear purpose of preparing for energy security crises, the financial objective of reducing liability is becoming more prominent in the case of Bitcoin. This could represent a new paradigm for strategic reserve assets, but it also differs from the traditional concept of strategic reserves. Going forward, discussions about Bitcoin being designated as a strategic reserve asset are expected to proceed with the validity of that purpose in mind.

◇ Hyperliquid faces growth challenges amid hacking concerns linked to North Korea

On-chain derivatives exchange Hyperliquid is experiencing turmoil due to accusations of hacking attempts by North Korean hacker groups and a large outflow of funds. On the 23rd, security expert Taylor Monahan claimed on social media platform X that North Korean hacker groups were testing Hyperliquid's security vulnerabilities, leading to an incident where approximately $110 million in USD Coin (USDC) was leaked from the platform.

In particular, Monahan revealed that wallets suspected to be linked to North Korea recorded losses exceeding $700,000 on Hyperliquid, indicating that it was likely a test to understand the platform's structure rather than actual transactions. Hyperliquid adopts a hybrid model combining the speed of centralized exchanges with the transparency of decentralized exchanges, but concerns over security have been raised due to its structural features, such as a small number of block validators and a limited group of developers managing the blockchain.

Hyperliquid maintained its position, stating, "There have been no hacking attempts, including those from North Korean hackers, and users' funds are safe," but market participants reacted sensitively. Following the controversy, Hyperliquid's own token, HYPE, which had recorded high growth rates after its launch, fell by about 20%, and the growth of Hyperliquid, which had recently been established as the largest exchange in the decentralized finance (DeFi) field with an average daily transaction volume of $8.8 billion, showed signs of slowing down.

☞ CrossAngle provides essential operational solutions and trust-based community building services for companies and foundations adopting Web3. It operates the crypto data intelligence platform, Janggle, and the Janggle research team is creating content to showcase trends in the virtual asset investment industry based on global virtual asset information and data.