Wall Street analysts urge investors to buy crypto stocks after $6.3 billion Binance hack

The $6.3 billion Binance hack during the late U.S. Thursday hours rattled crypto markets, but analysts at three Wall Street firms aren't convinced the fallout will last.

Cantor Fitzgerald, TD Cowen and Compass Point all struck a similar tone in Friday research notes, arguing that, while the theft is a serious blow for the largest crypto exchange in the world, there's little reason so far to think it poses a threat to the wider crypto market.

Cantor analyst Ramsey El-Assal said there may even be a silver lining in how quickly the industry responded.

Tether froze more than $1.5 billion in stolen assets, Circle (CRCL) blocked another $800 million, and Ripple froze roughly $200 million. In all, Binance says about $3 billion of the stolen funds have been frozen, though that doesn't mean the money has been recovered.

"While spectacular crypto hacks have become all too common, we believe the ecosystem is steadily adapting," El-Assal wrote.

He expects crypto stocks, including Coinbase (COIN), Robinhood (HOOD) and Strategy (MSTR), to recover once the initial panic subsides. Shares of Coinbase and Strategy plunged 12% on Friday with Robinhood down about 9%, mirroring overall sentiment in the market.

"We would be buyers on weakness," he said.

TD Cowen's Lance Vitanza made a similar case, arguing that the hack exposed weaknesses in Binance's security rather than in the technology behind bitcoin (BTC) or other cryptocurrencies.

"We do not stop using dollars when a bank is robbed, just as car theft does not invalidate the automobile," Vitanza wrote.

The distinction matters because the attack appears to have targeted Binance's transaction-signing infrastructure, not the Bitcoin network itself. Vitanza said the selloff could offer investors a chance to add to bitcoin positions and shares of companies that hold the cryptocurrency on their balance sheets.

At Compass Point, analysts Ed Engel and Michael Donovan argued that Binance could probably afford to make customers whole. They pointed to Binance's reported holdings, including $1.2 billion in excess USDT reserves, roughly $1.2 billion in bitcoin reserves and more than $1.5 billion in USDC treasury assets.

"We believe Binance has more than enough liquidity to cover the hole," they wrote.

That doesn't mean the fallout will be painless.

Compass Point expects pressure on stablecoin supply as Binance reimburses customers and warned that withdrawals from decentralized lending platforms could pick up once markets reopen.

The hack could also send business to Binance rivals, including Coinbase and Bullish (BLSH) (the parent company of CoinDesk), as well as decentralized exchanges such as Hyperliquid (HYPE), where users trade without handing custody of their assets to an exchange.

For bitcoin, Compass Point is watching the $75,000 to $77,000 range. A break below those levels could put the recent rally at risk.

As El-Assal put it: "Overall, this is painful, but it is not 2022."