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The crypto market was under pressure as the new month kicked off, with investors digesting the risks of the latest DeFi hack and the latest opinion from a federal court on when to treat crypto assets as securities.

On Tuesday, bitcoin was lower by 1.1% at $28,867.96, according to Coin Metrics. It ended July down 3.93%.

Ether, which has joined bitcoin in recent months as a sort of large cap, blue-chip trade in crypto, was down by 1.4%, after finishing July down by 3.35%. It was under extra pressure due to a recent exploit in DeFi giant Curve, however.

“Ethereum is sort of the king of DeFi and is viewed as one of the most important liquidity providers in DeFi,” said Josh Gilbert, an analyst at investment firm eToro. “It is a massive project so it’s not going to come under as much pressure as smaller alts but that Curve issue is ultimately the reason we’re seeing weakness in Ethereum right now.”

Altcoins fell after a federal judge said some crypto assets are securities regardless of the context in which they are sold. This opinion contradicted an earlier ruling from the same district court that said Ripple’s XRP may not be categorized as a security in all circumstances.

XRP fell 3%. Tokens named in the recent SEC lawsuits against Binance and Coinbase as potential securities were lower, including those tied to solana and cardano, which fell more than 2%. Polygon’s matic token lost 1.75%.

DeFi giant hacked

Other smaller coins, specifically in the DeFi segment of the market, were in the red, too. CRV, the native token of Curve Finance, a stablecoin-focused decentralized exchange, has fallen 2.8% in the past 24 hours, according to CoinGecko. Aave has fallen nearly 9% in the same period, and the tokens tied to Compound and the Synthetix network were down 10% and 7.3%, respectively.

Curve, a stablecoin exchange built on Ethereum, was exploited Sunday due to a bug in the smart contract programming language called Vyper. The hacker targeted three liquidity pools for tokens paired with ether and CRV as well as several ERC-20 tokens issued on Alchemix (alETH), Metronome Synth (smETH) and JPEG’d (pETH). It drained as much as $100 million worth of cryptocurrency from the platform, including $20 million of CRV and a version of ether, according to CryptoQuant.

“We’ve unfortunately had this scenario in crypto a few times over the past 12 to 18 months. Whenever investors hear the word hack … it puts the whole crypto market on the backfoot and that’s what’s happening here,” Gilbert said.

Bitcoin volumes have also dropped significantly from their recent highs and have failed to reclaim them despite the price of bitcoin showing so much resilience this year. It traded in a tight range throughout July, neither breaking above the key level of $31,500 nor below the $25,200, and it’s up 74% for the year.

“We had a lot of buzz recently around the Blackrock ETF but that can only drive bitcoin for so long and for so far. We got plenty of optimism with it but that initial optimism is fading slightly,” Gilbert said. “When bitcoin heads south so do most altcoins … and they’re selling off a little bit further given what we’re seeing with Curve.”

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