Crypto market lows are unlikely to form at moments when many analysts and traders are calling for one, according to crypto sentiment platform Santiment.
“Be cautious when you see a widespread consensus forming about a specific price bottom,” Santiment said in a report on Saturday, adding that “true bottoms often form when the majority expects prices to fall further.”
Santiment said that this has recently emerged as a trending topic on social media after Bitcoin (BTC) briefly fell below $95,000 on Friday amid a wider technology stock decline. “This suggests many traders believe the worst is over,” Santiment said, arguing that historically such sentiment is often followed by further downside.
Crypto market participants often make calls that the market has bottomed when psychological price levels are breached, such as Bitcoin falling below $100,000.
Bitcoin sentiment slumps, positive comments fall to one-month low
Despite the bottom-calling, prominent figures such as BitMEX co-founder Arthur Hayes and BitMine chair Tom Lee have recently reiterated their forecasts that Bitcoin could still rally to $200,000 or higher by the end of the year.
Santiment said that social media sentiment has turned “overwhelmingly negative.” Source: Santiment
Santiment also pointed out that the ratio of positive to negative comments about Bitcoin is at its lowest point in over a month.
“As Bitcoin’s price fell, its social dominance soared to over 40%, showing it is the main topic of a very fearful conversation,” Santiment said.
The sentiment platform added that many traders pinned the recent Bitcoin price drop on Strategy chairman Michael Saylor selling off Bitcoin, with social media mentions of “Saylor” surging sharply as Bitcoin fell.
Spot Bitcoin ETF outflows may be bullish
During an interview with CNBC on Friday, Saylor denied reports that the company was offloading some of its Bitcoin amid a flash crash in the asset’s price.
Meanwhile, Santiment said that the significant spot Bitcoin ETF outflows in recent times may be a positive sign for Bitcoin’s spot price.
“Large ETF inflows have often marked local price tops, while significant outflows have coincided with market bottoms, suggesting retail panic,” Santiment said.
Over the past three trading days, US-based spot Bitcoin ETFs saw $1.17 billion in outflows, according to Farside.
On Thursday, spot Bitcoin ETFs saw $866 million in net outflows, marking their second-worst day on record after the $1.14 billion daily outflows on Feb. 25.
Bitcoin softened as tech sector weakness spilled into crypto markets, reducing risk appetite and limiting demand for bullish leverage.
Persistent spot Bitcoin ETF outflows and targeted sales from a 2011 holder exacerbated downward pressure.
Bitcoin (BTC) is down 11% since Monday, falling to a six-month low of $94,590 on Friday. Bitcoin derivatives continue to signal weakness, even as several large tech names posted similar declines during the week. Traders are now asking whether the market has already found a floor and what must happen before confidence returns.
BTC futures aggregate open interest, USD. Source: CoinGlass / Cointelegraph
The pullback erased $900 million in BTC leveraged long positions, equal to less than 2% of total open interest. Despite the size of that figure, the abrupt price move barely dented the broader market. For comparison, the cascading liquidations on Oct. 10, worsened by very thin liquidity, triggered a 22% drop in BTC futures open interest.
Concerns about upward inflation pressure resurfaced after US President Donald Trump announced his intention to cut tariffs to alleviate high food costs. Mohamed El-Erian, chief economic adviser at Allianz, told Yahoo Finance that recession risks have increased as the “lower ends of the income distribution for households” struggles with the “affordability crunch.” Contagion could spread through the broader economy, El-Erian warned.
BTC 2-month futures annualized fund rate. Source: laevitas.ch
The BTC futures premium held near 4% on Friday, unchanged from the prior week. Although still below the 5% neutral line, the metric moved off the 3% lows seen earlier this month. Demand for bullish leverage remains muted, but that does not mean bears hold strong conviction. To gauge whether professional traders expect more downside, it helps to examine their long-to-short ratios.
Top traders BTC long-to-short ratio. Source: CoinGlass / Cointelegraph
Whales and market makers increased their long positions at Binance since Wednesday, buying the dip as Bitcoin slid below $100,000. In contrast, OKX whales cut their bullish exposure at a loss after the $98,000 support level failed on Friday. Even so, professional traders appear more optimistic now than they were on Tuesday.
AI-sector worries drive correction as traders derisk amid economic uncertainty
Part of the recent risk market correction was driven by worries in the artificial intelligence sector, which had been a major positive force for stocks. Legendary investor Michael Burry questioned whether lengthening depreciation schedules for computing equipment has artificially boosted earnings momentum. Amazon was the only major tech company that recently shortened its depreciation calendar.
The two-day $1.15 billion net outflows in Bitcoin spot exchange-traded funds (ETFs) in the US weighed on sentiment, even though the amount represents less than 1% of their assets under management. On top of that, selling pressure from a single 2011 Bitcoin holder added to fear and uncertainty. Analysts noted that the event was isolated and does not reflect a broader trend.
Bitcoin 30-day options delta skew at Deribit (put-call). Source: laevitas.ch
The BTC options delta skew stood at 10% on Friday, nearly unchanged from the prior week. Although above the neutral 6% mark, the market’s options-based fear gauge is still far below the 16% peak from last month. Given that Bitcoin has dropped 24% from the all-time high, one could argue that the options market has shown resilience.
Multiple companies valued at $20 billion or more have posted losses of 15% or greater since Nov. 5, including CoreWeave (CRWV), Ubiquiti (UI), Nebius Group (NBIS), Symbiotic (SYM) and Super Micro Computer (SMCI). The odds suggest traders will continue to derisk and favor cash until there is more clarity on the economic outlook. As a result, Bitcoin’s price may remain under pressure.
This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
The spot Solana ETFs have recorded inflows for 13 consecutive days.
SOL broke its multi-year uptrend, slipping below a key moving average.
Spot Solana (SOL) exchange-traded funds continued to attract investor interest, recording their thirteenth straight day of inflows, underscoring institutional demand for the network’s native asset.
According to data from SoSoValue, Solana ETFs added $1.49 million on Thursday, bringing cumulative inflows to $370 million and total assets to over $533 million. The Bitwise Solana ETF (BSOL) was the only one that recorded inflows on Thursday, marking the weakest since its launch on Oct. 28.
Solana ETFs inflows. Source: SoSoValue
The weakening SOL ETF inflows reflected the bearish sentiment across the market, with spot Bitcoin (BTC) ETFs recording $866 million in daily net outflows on the same day, the second-worst day since launch.
Spot Ether (ETH) ETFs also posted $259.2 million in outflows, reducing their cumulative inflows to $13.3 billion. The funds shed $183.7 million on Thursday and $107.1 million on Wednesday.
The persistent demand for Solana ETFs has, however, failed to hold SOL above key levels, with the technical setup indicating a potential for a deeper correction.
SOL price breaks key support levels
In line with the waning ETF inflows, SOL’s price action turned sharply bearish last week, falling over 34% over the last two weeks to $142 on Friday, its lowest level since June 23. The correction also broke a 100-week SMA and the multiyear uptrend that began in January 2023, with the $95 level serving as the yearly low.
Solana is currently testing a daily order block around $140, a level with limited support, according to data from Glassnode.
Glassnode’s UTXO realized price distribution (URPD) — a metric that shows the average prices at which SOL holders bought their coins — reveals that there is little clustering of these buy levels below $140. This means there are a few holders who are defending the price there.
SOL: UTXO realized price distribution (URPD). Source: Glassnode
If the price breaks below this level, it could drop toward the 200-week SMA at $100, which represents the last line of defense for SOL price.
Solana’s downside is backed by weakness in the relative strength index, which has hit its lowest level since April 2025.
As Cointelegraph reported, a break below $150 will see the SOL/USDT pair extend the decline to $126 and subsequently to the solid support at $100.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
Bitcoin’s (BTC) latest drawdown has pushed the asset to its lowest price since May 2025, and Strategy’s MSTR stock is also feeling the pressure. Stock prices slipped to $197 at pre-market for the first time since October 2024, extending its woes.
Key takeaways:
Strategy’s $5.77 billion Bitcoin move is likely a custodial relocation.
MSTR’s Net Asset Value (NAV) multiple drops below one for the first time, increasing investors’ concern about the company.
One Bitcoin analyst said forced liquidation for Strategy remains unlikely despite market stress.
Wallet move sparks panic after a $5.7 billion Bitcoin transfer
Market anxiety surged on Friday after Strategy shifted 58,915 BTC ($5.77 billion) into new wallets, immediately triggering speculation on X that the company was preparing to sell part of its holdings. The noise intensified as bots and algo traders reacted aggressively to the move.
Analysts quickly pushed back against the panic, noting that the transfer appeared to be a custody restructuring, not a distribution. One crypto analyst wrote,
“Arkham AI supposes this is wallet rebalancing rather than distribution. The market is reacting, and the bots are selling. Any excuse or piece of fake news is enough to screw over the smaller players.”
Despite the clarification, crypto market sentiment remained fragile as traders tried to assess whether deeper issues were emerging beneath the surface.
MSTR NAV drops below 1, an unpopular first for Strategy
The more alarming development came from Strategy’s valuation metrics. For the first time, Strategy’s Net Asset Value (NAV) multiple fell below 1, meaning the market now values MSTR shares at less than the value of the Bitcoin it holds, a dramatic reversal from years of premium pricing. At the moment, the mNAV value is back above, at 1.09, which is still low.
Bitcoin Strategy Tracker NAV data. Source: X
A NAV below 1 indicates that Strategy’s market value has fallen beneath the value of its BTC holdings minus liabilities, signaling that the market is valuing the company at a discount relative to its underlying BTC reserves. This typically reflects investor concerns about debt risk, liquidity or the sustainability of the company’s aggressive Bitcoin-acquisition model.
Likewise, K33 Research’s head of research, Vetle Lunde, highlighted a $79.2 billion drop in Strategy’s equity premium since November 2024. Lunde added that although Strategy raised $31.1 billion through dilution, nearly $48.1 billion of implied Bitcoin demand never translated into real BTC purchases. In simple terms, investor appetite for MSTR no longer fuels direct Bitcoin exposure as it might have before.
MSTR market cap discount/premium relative to BTC holdings. Source: Vetle Lunde/X
Still, Bitcoin proponent Willy Woo downplayed concerns about liquidation. The analyst said Strategy is unlikely to be forced to sell Bitcoin in the next bear market as long as MSTR trades above $183.19 by 2027, a level tied to roughly $91,500 BTC, assuming a 1x NAV multiple. Woo warned only of a potential partial liquidation if Bitcoin underperforms during the anticipated 2028 bull cycle.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
Michael Saylor, executive chair of Strategy, denied reports that the company was offloading some of its Bitcoin amid a flash crash in the cryptocurrency’s price.
In a Friday X post, Saylor said that there was “no truth” to a report claiming that Strategy reduced its overall Bitcoin (BTC) holdings by about 47,000 BTC, or $4.6 billion at the time of publication. Saylor said the company was continuing to buy Bitcoin as the price dropped by more than 4% in less than 24 hours, from more than $100,000 to less than $95,000.
“I think the volatility comes with the territory,” said Saylor in a Friday CNBC interview. “If you’re going to be a Bitcoin investor, you need a four-year time horizon and you need to be prepared to handle the volatility in this market.”
Although Strategy remains the company with the largest Bitcoin treasury — about 640,000 BTC — it has seen its dominance decline as others enter the market. Cryptocurrency exchanges like Coinbase and Metaplanet, a BTC treasury company, outpurchased Strategy on Bitcoin in October.
The share price of Strategy’s MSTR stock on Nasdaq has also declined. The exchange showed the price had fallen to $205.38 at the time of publication — a drop of more than 17% in the previous five days.
The US government shutdown ended, but no significant BTC surge?
Although the end of a 43-day US government shutdown this week resulted in a short-term rally for many stocks, the long-term impact on Bitcoin, if any, remains to be seen.
The price surged to more than $106,000 on Sunday amid growing optimism that US lawmakers would soon reach a funding deal. BTC similarly surged on Wednesday following the House of Representatives passing a continuing resolution to fund the government and US President Donald Trump signing the bill into law.
However, according to data from Nansen, when the government reopened on Thursday, the BTC price dropped below $100,000.
The UK’s central bank, the Bank of England (BOE), has released a proposed regulatory regime for stablecoins. The consultation paper took into account the perspectives of the crypto industry, but some observers say it remains restrictive.
BOE released the document on Nov. 10 — some two years after it announced the initial discussion paper. The original offered a vision for crypto that many in the industry claimed would doom the UK’s digital asset space.
The BOE said that it received comments and feedback from a broad range of 46 different stakeholders, including “banks, non-bank payment service providers, payment system operators, trade associations, academia, and individuals.”
The UK’s central bank may have scrapped some more hardline requirements, but some in the industry believe that it isn’t enough. Tom Rhodes, chief legal officer at UK-based stablecoin issuer Agant, said the bank remains “disproportionately cautious and restrictive.”
The bank also released a roadmap for further rulemaking. Source: Bank of England
Bank of England still cautious on stablecoins
The new iteration presents a number of improvements on the 2023 version, Rhodes told Cointelegraph.
“The latest proposals do include some innovative features, such as direct BOE liquidity lines and the ability to repo reserves for liquidity purposes.”
He said that, as it concerns the UK market, “these proposals can be further explored and potentially expanded to create a more competitive backing asset regime, without compromising on stability.”
But despite the “welcome progress in the BOE’s sentiment towards stablecoins,” it has been “unusually vocal about the perceived risks of stablecoins,” said Rhodes.
One of the more controversial restrictions in the paper was limits on what the BOE called a “systemic retail stablecoin.” In the paper, this is defined as a stablecoin that is “widely used by individuals to make everyday payments such as for shopping and receiving salaries.”
The central bank wants to see limits of 20,000 pounds for individuals and 10 million pounds for businesses that accept it as a form of payment. This is an increase from the initial proposal, but the idea of limits on how much crypto you can hold didn’t sit well with some.
Crypto influencer Aleksandra Huk wrote, “Bank of England wants to cap stablecoin holdings at £20,000. Who gave them the right to tell us what to buy, where to store our money and how much we can have? […] Honestly, this is the best advert ever for privacy coins and for leaving the UK.”
There are a few caveats to the suggested rule. Geoff Richards, head of community at the Ontology Network, noted, “The proposal applies only to sterling-denominated stablecoins used in UK payment systems that could become ‘systemic.’ Not USDT, not USDC, not random DeFi tokens.”
Ian Taylor, board member of crypto industry advocacy group CryptoUK, told Cointelegraph that he understands the central bank’s more cautious approach, at least as it applies to the stablecoin limits:
“The Bank of England has a mandate to protect against financial stability. And that financial stability is connected to the banking system. So insofar as banks take deposits and they issue loans against those deposits […] creates credit, this is an economic benefit to any economy that we have.”
The BOE is rightfully worried that taking deposits out of banks would reduce their ability to lend, affecting financial stability. “So, that’s why they want to baby-step this.”
Rhodes said that the “vast majority” of UK stablecoins will not fall under the regime anyway, at least not as stated in the paper. He noted that Mastercard was only recognized as a systemically important payment system in 2021 and that non-systemic stablecoins will be regulated under the Financial Conduct Authority’s (FCA) ruleset, “which is less restrictive.”
Still work to be done as UK opens up to crypto
Access to central bank liquidity and deposit accounts at the BOE was a welcome update for stablecoin issuers. But crypto industry representatives believe that there is still room for improvement in the central bank’s plan.
Regarding the stablecoin caps, “The systemic thresholds remain uncertain,” said Rhodes. He said it would be helpful to have clarification from His Majesty’s Treasury when an issuer has reached sufficient scale to “pose a risk to the UK economy as a whole, before they will recognize the issuer as systemic.”
Taylor also noted the difficulty of enforcing these stablecoin caps. If the government is licensing an issuer, then they’re the ones “responsible for monitoring each individual client or customer, whether wholesale, corporate or retail, as to how many stablecoins they’ve given them.”
The problem is that many people get their stablecoins on secondary markets or a “host of different sources.” People can receive stablecoins as compensation at work or on an exchange or peer-to-peer transaction. “So, the actual operational enforcement of that I question, and we’ve seen no detail in regards to that.”
Overall, “clarity and speed” will make the UK stablecoin ecosystem more competitive, said Arvin Abraham, partner at Goodwin Procter. He told Cointelegraph that regulators need to give issuers “a clean runway and predictable timelines” to navigate the approvals process.
Speed isn’t the government’s strong suit, however.
The British government has been working on crypto regulations since 2017, when it first adopted Anti-Money Laundering and Know Your Customer requirements for crypto-related businesses like exchanges. Now, eight years later, the central bank is still developing its policies based on industry feedback.
The slow pace of progress presents a problem. According to Taylor, “We’ve been consulting on a wider framework to regulate stablecoins for almost five years, and we still haven’t gotten any actual license framework in place, which is problematic for a number of reasons,” he said.
“It doesn’t help businesses that want to launch stablecoins in the UK. They don’t have a clear roadmap of how to do that,” he said, “which in turn forces them to move offshore to jurisdictions where there are other regulatory frameworks already live.”
This is for a number of reasons, Taylor explained, including consecutive changes in government, as well as a lack of “real champions in any of our key stakeholders, be that the current government, be that Treasury, be that the FCA.”
Progress on crypto regulations may be slow in the UK — slower than many in the industry would like — but for Abraham, “The Bank is being pragmatic and fair. The overriding message is that innovation is welcome, but if you want your token to function like money, you need money-grade controls.”
The cross-border e-commerce arm of Chinese tech behemoth Alibaba is working on a deposit token amid mainland China’s crackdown on stablecoins, according to CNBC.
Alibaba president Kuo Zhang told CNBC in a Friday report that the tech giant plans to use stablecoin-like technology to streamline overseas transactions. The model under consideration is a deposit token, which is a blockchain-based instrument that represents a direct claim on commercial bank deposits and is treated as a regulated liability of the issuing bank.
Traditional stablecoins, which these tokens closely resemble, are issued by a private entity and backed by assets to maintain their value. The report follows JPMorgan Chase — the world’s biggest bank by market capitalization — reportedly rolling out its deposit token to institutional clients earlier this week.
The news also follows reports that Chinese technology giants, including Ant Group and JD.com, suspended plans to issue stablecoins in Hong Kong after regulators in Beijing expressed displeasure with the plans. The report is just the latest of many suggesting that mainland Chinese authorities appear dead set on preventing a stablecoin industry from arising in the country.
In July, both Ant Group and JD expressed interest in participating in Hong Kong’s pilot stablecoin program or launching tokenized financial products, such as digital bonds. Similarly, HSBC and the world’s largest bank by total assets — the Industrial and Commercial Bank of China — were reported to share these Hong Kong stablecoin ambitions in early September.
Later in September, a now-removed report by Chinese financial outlet Caixin claimed that Chinese firms operating in Hong Kong may be forced to withdraw from cryptocurrency-related activities. According to the report, policymakers would also impose restrictions on mainland companies’ investments in crypto and cryptocurrency exchanges.
In early August, Chinese authorities reportedly instructed local firms to cease publishing research and holding seminars related to stablecoins, citing concerns that stablecoins could be exploited as a tool for fraudulent activities. Still, China is not entirely devoid of stablecoin ties.
In late July, Chinese blockchain Conflux announced a third version of its public network and introduced a new stablecoin backed by offshore Chinese yuan. Still, the stablecoin aims to serve offshore Chinese entities and countries involved in China’s Belt and Road Initiative — not the mainland.
In late September, a regulated stablecoin tied to the international version of the Chinese yuan launched. Still, this product is also intended for foreign exchange markets and was launched at the Belt and Road Summit in Hong Kong, signalling a similar target market.
In fact, a recent analysis suggests that we should not expect Chinese stablecoins to be allowed to circulate in the mainland. Joshua Chu, co-chair of the Hong Kong Web3 Association, said that “China is unlikely to issue stablecoins onshore.”
Crypto exchange Kraken isn’t rushing toward a US public listing, even as a friendlier policy climate and improving market conditions have spurred other crypto companies to pursue an initial public offering.
“We’re financially sound. We know how to have our own risk management on how we run our company,” Kraken co-CEO Arjun Sethi told Yahoo Finance on Thursday.
“We have enough capital on our balance sheet today as a private company,” he added. “We don’t race to the door as quickly as possible.”
Multiple crypto companies have gone public this year, as the Trump administration has signaled a friendlier approach to the industry, which is seen as helping to spur successful debuts.
Arjun Sethi speaking to Yahoo Finance at its Invest event in New York City on Thursday. Source: YouTube
Reports since at least mid-2024 have said Kraken was planning to go public, with Bloomberg reporting in March that the company was lining up an IPO for as early as the first quarter of 2026.
No FOMO despite new IPOs
Sethi said Kraken doesn’t have “the fear of missing out because everyone else is doing it.”
On Thursday, crypto asset manager Grayscale filed to debut in the US as companies look to repeat stablecoin issuer Circle’s bumper IPO in June, where its shares soared over 160% to over $83. A rally in the days after pushed the company’s stock price to over $260, but it’s since cooled to just over $82.
Kraken rivals Gemini, Bullish and eToro have also debuted this year alongside blockchain firm Figure, while custody firm BitGo filed to go public in September.
“What’s good about these companies coming out first is that they are educating the market on what’s good and what’s bad, what margin looks like, how do you make money,” he added.
Kraken launched in 2011, and Crunchbase shows that it has raised $530 million in funding over that time, the bulk of which came from a $500 million venture round in September that valued it at $15 billion.
Kraken’s Sethi not worried about Bitcoin dip
Bitcoin (BTC) has fallen over 4% in the past day to near $97,000, a more than 22% correction from its peak of over $126,000 in early October.
However, Sethi didn’t appear concerned about the price drop, which typically translates to lower traffic and volume across the board for crypto exchanges like Kraken.
“If you just look at the general slope of crypto, Bitcoin […] you always have these curves that have continued to change for all asset classes,” he said.
“What’s much more important is the thesis behind why you’d want to buy Bitcoin or Ethereum, or any of these assets, versus holding a dollar or any other shares,” he added.
The acting chair of the Federal Deposit Insurance Corporation (FDIC), the regulatory body overseeing banks in the US, is reportedly considering guidance for tokenized deposit insurance and plans to launch an application process for stablecoins by year’s end.
Acting FDIC Chair Travis Hill, who has made bullish statements about tokenization in the past, told the Federal Reserve Bank of Philadelphia’s Fintech Conference on Thursday that the regulator will eventually release guidance around tokenized deposit insurance, according to reports.
The FDIC protects depositors in the event of a bank failure and insures money in accounts at banks that are insured by the regulator.
“My view for a long time has been that a deposit is a deposit. Moving a deposit from a traditional-finance world to a blockchain or distributed-ledger world shouldn’t change the legal nature of it,” Hill said, as reported by Bloomberg.
Excluding stablecoins, the total value of tokenized real-world assets surpassed $24 billion in the first half of the year, with private credit and US Treasurys making up the bulk of the market, according to a report by RedStone.
BlackRock, the world’s largest asset manager, is one of the most prominent players in the space and launched a tokenized money market fund called BUIDL in 2024.
Stablecoin application regime by the end of the year
At the same time, Hill reportedly announced the agency is also working on a regime for stablecoin issuance and expects to issue a proposal for an application process by the end of 2025 as part of its duties in crafting rules under the GENIUS Act, according to Law360.
He said it’s still too early to know how many institutions will be interested, but the FDIC staff is working on the standards around capital requirements, reserve requirements and risk management for FDIC-regulated stablecoin issuers.
Stablecoins have also been a high-growth area, with banks worldwide exploring this technology. The market capitalization of stablecoins is approximately $305 billion as of Friday, according to blockchain analytics platform DefiLlama.
Stablecoins have been a high-growth area this year, with a market capitalization of around $305 billion. Source: DefiLlama
Blockchain security platform Socket has warned of a new malicious crypto wallet extension on Google’s Chrome Web Store that has a unique way of stealing seed phrases to drain user assets.
The extension is called “Safery: Ethereum Wallet”and claims itself as a “reliable and secure browser extension designed for easy and efficient management” of Ethereum-based assets.
However, as highlighted in a Tuesday report from Socket, the extension is actually designed to steal seed phrases via a crafty backdoor.
“Marketed as a simple, secure Ethereum (ETH) wallet, it contains a backdoor that exfiltrates seed phrases by encoding them into Sui addresses and broadcasting microtransactions from a threat actor-controlled Sui wallet,” the report reads.
Notably, it currently sits as the fourth search result for “Ethereum Wallet” on the Google Chrome store, just a couple of places behind legitimate wallets like MetaMask, Wombat and Enkrypt.
The extension enables users to create new wallets or import existing ones from elsewhere, thereby establishing two potential security risks for the user.
In the first scenario, the user creates a new wallet in the extension and immediately sends their seed phrase to the bad actor via a tiny Sui-based transaction. As the wallet is compromised from day one, the funds can be stolen at any time.
In the second scenario, the user imports an existing wallet and enters their seed phrase, handing it over to the scammers behind the extension, who can again view the information via the small transaction.
“When a user creates or imports a wallet, Safery: Ethereum Wallet encodes the BIP-39 mnemonic into synthetic Sui style addresses, then sends 0.000001 SUI to those recipients using a hardcoded threat actor’s mnemonic,” Socket explained, adding:
“By decoding the recipients, the threat actor reconstructs the original seed phrase and can drain affected assets. The mnemonic leaves the browser concealed inside normal-looking blockchain transactions.”
How crypto users can avoid scam extensions
While this malicious extension appears high in the search results, there are some clear signs that it lacks legitimacy.
The extension has zero reviews, very limited branding, grammatical mistakes in some of the branding, no official website, and links to a developer using a Gmail account.
It is important for people to do significant research before they deal with any blockchain platform and tool, be extremely careful with seed phrases, have solid cybersecurity practices, and research well-established alternatives with verified legitimacy.
Given that this extension also sends microtransactions, it is essential to consistently monitor and identify wallet transactions, as even small transactions could be harmful.
