Biggest hack in history? Start of DEX era?

 The biggest news today, just as people are heading out for the weekend, was the shock sudden halt of deposits and withdrawals by the world's biggest centralised exchange (CEX), Binance. There is a reported $6.3bn security exploit that led to the world's biggest crypto loss (Article 1).

To give some context, Binance is #1 in CEX trading activities, and takes a lion's share of 38% of the top exchange volumes:

For the techy (or concerned account holders, who may inadvertently forgotten to move their assets offline to cold wallet - remember, always self custody!), you can monitor the latest whereabouts of the stolen funds (according to one tracker) at the below link:

link: https://arkm.com/explorer/entity/binance-hacker-2​

Not only is this Binance hack the biggest in monetary terms, it is also the biggest in terms of its proportion relative the market cap of bitcoin at the time:

Above the biggest six hacks are in bold for easy identification. Interestingly Binance is not the first time to be hit, which brings up the question: why are there not more people self custodying their cryptos?

No wonder the market is in a nervous crash today, with most large coins down up to 5% at the time of writing:

However, it is worth noting that once again, the privacy coins (XMR, ZEC) in the top 10 are the only ones making gains (aside from TRX which benefits from transaction spike as capital flee to stablecoins)... For our recent research on the rise of the privacy coins, please see here and here.

Even cold wallet supply chain may be at risk

However, for even the diligent coin holder, compromises in the cold wallet supply chain can also bring risks, as the recent Ledger hack event highlights - in fact as of now, further damage is reported (see Article 2: tampered Ledger hardware wallets with malicious hardware implants caused at least $2.7 million in losses).

This is why it is worth savvy crypto enthusiasts to look into an alternative system, called Multi-party computation (MPC), and a series of six articles on its benefits are contained in the links in Article 3 below. Disclaimer: your correspondent is neither connected, nor invested in this project, judge it for yourself after reading if this is something that could someday become the new standard of wallet technology.

3 core pillars: open source, permissionless, decentralisation

This current incident brings us back to the principal of responsible and sovereign asset safeguarding - do not trust centralised blackboxes - Binance platform is one that is not open source, not decentralised, and requires log in permission to access. In fact it breaks all the rules about the 3 core pillars on which the crypto ecosystem is built!

Of course, most fiat monetary system are built on the same risky foundations (except gold and cash). This is why even when centralised players step in to prevent hacks like this, it is handing your security from one risky party to another (see Article 4 on how the two big stablecoin issuers are helping to stem the flow). This is exactly the same reason traders should look to decentralised stablecoins going forward to avoid identical risk as they are under when trading through CEXes.

We fully expect the next mega trend to be not only be an increasing move from centralised fiat to crypto finance, but a rapid transition from centralised crypto to privacy crypto (including stablecoins). This is all going to be driven by bankrupt governments increasingly tax hunting their populace's hard earned money - the way in the ancient past when people buried their gold, and in current era when they hide cash under their mattress. The future will be the peoples of the world shielding their wealth from prying eyes in privacy coins.

As a result, could be an explosion of decentralised exchange (DEX) trading (which may well be helped by today's hack when more traders lose faith in CEXes):

Coupled with an eventual turn in the crypto cycle, we could see a 3-4x increase in absolute DEX trading volumes in the next year or two...

Conclusion

The old adage of 'Not your keys, not your coins' stays very much relevant, to which we should add 'Not decentralised, permissionless, or open source? Not your money!'

Article 1: Binance halts withdrawals after $6.3bn hack

Article 2: Singapore Police Report $2.7 Million in Tampered Ledger Wallet Losses

Article 3: The 6 vultisig articles

One Moment of Randomness ​

​What Randomness Actually Is ​​

​Anatomy of a Seed ​​

​The Bolt-On Defenses ​

​The Wallet Without a Seed ​

​Self-Custody Was Never the Problem ​

Article 4: Binance Hack: Tether (USDT) and Circle (USDC) Freeze $1.8B in Stablecoins Linked to Suspected Wallets

BMM Greece - adios and efcharistó to our beloved Athens

Grexit Theme a strong performer

Long term readers may recall how we started studying the oversold Greek property market back in 2015-6 for a possible reversal bounce. Thanks to the confidence and trust of a small band of believers, we launched on this investment theme starting 2017, and the market has been very much a one way rising streak for us: 

We first started buying in 2017 and first began taking profit in 2023 (slightly early but not a bad call given the still bloated bureaucracy dogging some of our exits - a story for another time!). In USD terms we also caught the bottom of the cycle (red line below), and began selling when prices exceeded the GFC peak in Euro terms (blue):

Given the brewing of another bigger sovereign debt crisis in Europe, and the worsening geopolitical outlook (Greece could perversely benefit as a fringe region and receive fleeing capital from neighbouring conflict jurisdictions, so may not be all bad), now is a time to close out this theme, until the coast is clear for us to revisit Greece next cycle.

Relative winner too, not just absolute gains

We are happy to also see how the Greek market gained significantly more than many mainstream property peers from the 2017 bottom to now, eg. Athens prices are up 153% vs HK:

Against the a favourite investment of Hongkongers - London - Athens also outran by 126% in the same period:

The only exception is our current top favoured destination - Perth - Athens peaked (coincidentally when we started disposing in 2023) when we began going overweight W Australia in a big way, which has now outperformed Athens some 30%:

From frog to prince? How Greece looks now...

Macro conditions are better but probably not sustainable enough going forward, because on many factors, Greece's recoveries are not strong enough to lead to long term continued improvements:

a) debt recovery did not reach a self balancing level before global ZIRP has turned into high interest rate environment:

Despite refrained govt spending, debt levels have still been rising (blue line below), and although GDP growth has caught up since 2020, the gap remains too large to close:

b) still large trade deficit to sustain balance of payment improvements:

c) demographic headwind remains strong - despite recent spike in immigration (red line below), the ageing population and accelerating negative natural growth rate (blue line) will pose huge challenges for productivity.

Further immigration momentum is now curtailed due to govt raising thresholds (eg the Property transfer tax backlash, see Article 4), and potentially China's shutting of emigration routes which has provided the largest group of migrants to date (see Article 1 - How Chinese investors quietly transformed Athens – one visa at a time).

The main source of immigrants are currently tax refugees (see Article 3 - Will the last millionaire to quit socialist Britain for sunny, low-tax, Thatcherite Greece please turn out the eco-lightbulbs), but local supply challenges may continue to pressure govt to close the gates further (see Article 2).

Conclusion

So we are glad we have captured this rewarding and culturally most enriching jouring, but for the near future, it is adio (Αντίο) Athena, and thanks for all the fish...

Sovereign crisis - France blow out right on cue - chartporn 3

 

The recent French riots is but the tip of the iceberg in what could spiral out of control in the 2nd largest economy in the EU, as we have aluded to for some time now. The next big crisis will be from sovereign bonds, and France is indeed leading the charge (see here). More graphically, the debt pile is now much higher than even the USSR at the time it broke up:

Europe faltering on all fronts

The woes in Europe does not stop at the English Channel - as indicated in the how HSBC may be caught in a rising tax trap (see Article 7), UK is also facing some severe fiscal challenges and tax hikes may be the only solution, which will surely weaken the tax base even further.

And Germany's continuous decline in manufacturing output (Article 1) could further undermine investor confidence when any bad statistic hits the wires next. All major economies are now in a spiralling interest cycle, and any default by a weak payer could trigger the next contagion:

On top of all this, when more central banks next hike policy rates, the momentum could accelerate in long bond yield increases:

  Fed – further 50bp of Fed hikes expected
  RBA – risk of further tightening this year
  ECB - 25bp hike expected by year end
  BoE – a 25bp hike by year end
  BoC - expect to lift 25bp in both December and March

While some banks may be advocating long bonds at this juncture (below chart shows massive long bets on bonds right now), may be due to myopic focus of very short term trading patterns, the mega multi-decade turning point upon us could swiftly sweep all longs into big losses, so beware of who you listen to...

Other factors to exacerbate rate pressures

There are some truly worrying developments all over the place that suggest inflationary pressures will not ease, for example, Supertanker Rates Soaring To Near Record $1 Million A Day, adding cost of oil and bulk commodities being shipped (Article 2), and even in the US, diesel prices are reaching new highs:

Deglobalisation / trade fragmentation add headwinds

As govts lose people's confidence (eg Scottish, Welsh and Northern Irish leaders meet to plan break-up of United Kingdom, Article 3), separatist movements is now clearly on the march, increasing trade and investment friction, further adding to inflationary pressures. The next one to watch will be the Alberta vote to leave Canada:

Meanwhile increasing temptation to add sanctions will further disrupt global supply chains, as Trump signed the Russia and Iran Sanctions Bill (Article 4)...

US should be safer, private sector in better shape, but hyperscalers...

Although the US debt situation is severe (most of 2026 rollover is already on short duration, and likely see some coupon inflation soon, see chart below), the likely blow up first shot will be fired in Europe or Japan, or some other fringe economies.

We continue to see the pandemic to be centred on public sector, as for the first time in the past 70 years, govt debt is by far the biggest elephant in the room:

Also worth staying vigilant is how the new bubble of AI may be pricked given how extended the euphorial rises have become, and of course with it all the hundreds of billions of AI related debt issued of late:

Risk of false flags rising

When govts lose control, the temptation rises to create false flags to divert attention to 'external enemies'; the institution of emergency conditions may also conveniently defer or cancel elections in which current politicians in power could dodge the unavoidable losses facing them. The telltail signs are now becoming quite obvious:

- Poland's prime minister warns of Russian 'accidental' attacks on Ukraine's allies (Article 5);

- Moscow Sends Nuclear Warning to NATO as Tensions Rise in the Baltic (Article 6)

So many things can go wrong, and some of them catastrophically... all we can hope is to be prepared and safeguard our own immediate circle of care. Hope our fears of the bad outcomes are overly pessimistic, it still does not make the case for preparation invalid.

---------------------
Article 1: Who backstops the backstop?
https://bondvigilantes.com/blog/2026/09/who-backstops-the-backstop/

Article 2: Mideast Chaos Sends Supertanker Rates Soaring To Near Record $1 Million A Day
https://www.zerohedge.com/energy/mideast-chaos-sends-supertanker-rates-soaring-800000-day

Article 3: Scottish, Welsh and Northern Irish leaders meet to plan break-up of United Kingdom
https://www.telegraph.co.uk/politics/2026/09/13/irish-scots-and-welsh-leaders-meet-to-plot-break-up-uk/

Article 4: Trump Signs Russia and Iran Sanctions Bill
https://www.theepochtimes.com/us/trump-signs-russia-and-iran-sanctions-bill-6089946

Article 5: Poland's prime minister warns of Russian 'accidental' attacks on Ukraine's allies
https://www.npr.org/2026/09/18/nx-s1-5973265/poland-nato-russia

Article 6: Moscow Sends Nuclear Warning to NATO as Tensions Rise in the Baltic
https://www.themoscowtimes.com/2026/09/30/moscow-sends-nuclear-warning-to-nato-as-tensions-rise-in-the-baltic-a93828

Article 7: 滙控恐要進貢倫敦 再非收息首選
https://www.hkej.com/dailynews/article?id=4535013

 

Privacy coins crushing blue chips

 Strong run continues apace

Two weeks ago, we explored the background of why privacy crypto coins were doing so well. We didn't expect their stellar rises to have continued, here is the one-month performance vs BTC (black line):

ZCash has since risen 106% vs BTC's 4%, on a one-year horizon, its performance is a jaw dropping 29x:

All of this highlights how screwy the world has become, and the relentless poking at the people's private financial affairs by the bankrupt govts is driving more money underground...

In view of this new trend, we heartily recommend you read an excellent primer comparing the big two privacy coins: Monero vs Zcash (Article 3), and which one might be suited to your needs.

Weaponisation of Stablecoins

As we have half expected, as soon as govts lay their hands on the levers of control, they cannot resist pulling them. And how hard they did this time, whether maliciously or willfully, against some unsuspecting genuine userss.

The whole sordid story is painfully laid out in Article 2, chronicaling how Tether froze USDT wallets at government request, without warrant or court sanctions. Basicallyl Tether (or other regulated stablecoin issuers) are now the 'legal' way through which governments could not constitutionally do by themselves!

Decentralised Stables the way forward?

In view of this alarming development, may be all our future stable holdings will need to go decentralised... Luckily in the self executing protocol space, and with reasonable liquidity, we have Ethena (USDe) and DAI to fall on:

Both are trading on as narrow 90-day volatility ranges as Tether, and both have well over 3 years of track record. Perhaps these will now become the privacy coin equivalent of winners in the stablecoin space as self protecting users also flee the potential tyranny and confiscation they might be subjected to?

A scary summary of the above dystopian Tether incident is summarised well in this schematic:

Perhaps freedom loving Americans need to find ways to reverse this quick or they will be no different from the average East German under Stasi?

Some good news amongst the doom and gloom

The good news however, is that crypto at large do seem to have caught their cyclical bottom as we highlighted in an earlier technical analysis reprot - one of which we did not include is added here:

a sign we may have bottomed out this cycle?

In fact, looking at more technicals, that does indeed suggest so:

BTC may hit $97k (+13%) within weeks

Bitcoin could even trashing the AI infussed S&P:

hitting trend top suggest 90+% outperformance vs S&P by early 2027

There are champions of personal freedoms out there

Despite the ever encrouching state, it is not all grim ahead, we see liberty championing crypto natives starting to fight back, eg billionaire Ben Delo (see his fascinating, even inspiring story in Article 1).

Article 1: Reform’s £36m donor Ben Delo: Oxford-educated crypto king who was thrown out of three primary schools, pardoned by Trump and became UK’s youngest self-made billionaire

Article 2: How the government is using Tether to build the financial component of the surveillance state

Article 3: Monero vs Zcash: Which Privacy Coin Wins in 2026?

Sovereign bond - crisis chartporn 2!

 Some reader feedback from our last missive - 'I am not as bearish as you' being a common theme. This triggered us to bring out more charts from our extensive collection on the subject.

We are not here to scare, but try to warn so we are all prepared... The above view may be premised on the belief that Central Banks (CB) are able to save the market, again. But the below factors are suggesting that this time may be very different:

1) govt debt levels are already too dangeriously high

Japan debt aside, take another big OECD stalwart, France - its debt has now exploded to such levels that it is approaching Grexit Debt Crisis levels:

France now approaching Grexit debt crisis levels

The market is now so nervous about it that the spread over the Bund is higher than Grexit times (see Article 3). Of course the debt pile is not just even France's problem alone, the developed market taken together we are at post WW2 highs already:

The comfort and trust in sovereigns back in the early 1900s were premised on debt levels in the 40-60%s, not the 120+% we are sitting at now...

2) weak and fickle holders are all we have left

We showed how even Japan and China were lightening their treasuries load last instalment, what is more scary is how high the govt bond market is now inhabited by ultra-short term holders such as hedge funds:

They would bolt at the first sight of trouble, meanwhile, more prudent central banks continued to amass gold in their vaults, as shown here:

3) wars and trade wars will exacerbate inflation

The marching war drums are getting louder as more European countries plan for compulsory drafting (Article 2). Perhaps it is because of the unstable debt and wilting political support that the politicians will have no alternative but to divert attention abroad. What better excuse than the Russian bogeyman they have been counting on (but disappointed) for so long?

Wars bring more inflation, but even before the bullets fly, trade wars (what we have highlighted as deglobalisation) are already creating price volatility, as seen in the latest round of US-Canadian trade spat:

- Trump ...to ban imports of some motorcycles, dairy and alcohol (Article 5);

- Canada publishes list of US products subject to counter-tariffs effective September 8, 2026 (Article 6).

Under such dysfunctional global economic, geopolitical situation, how could inflation not rise further?

3) issue competition is huge

This cycle is different from past debt crises in the sense that the most powerful, the most loaded up and cash rich companies in the world (ie the hyperscalers, the Mag7s) are competing with sovereigns for the pockets of investors amounting to hundreds of billions of bonds. One estimate puts the 2026 issuance in the long duration space at close to 70% of the size of Treasury issuance:

No wonder the yields are spiking everywhere, here is 10y TB:

​

4) confidence is already lost, we are in finale

We know the market's confidence in the sovereigns are gone when you see rates rise while economic indicators tank - below the blue arrows and red arrows move in lock step in the good old days... until the market realises that bad economy can no longer be saved by rate cuts, and that whatever the CBs do beckons even more selling (and higher yields):

All the theatrics that the govts can throw at the problem (see Bessent's "I am the house now" claim, Article 1) is not going to work, because people see that rotating long duration into bills is akin to taking poison, as the cycle is now out of control:

The Debt Spiral and Currency Debasement

Whatever short term reprieve will likely be a short opportunity... a bit like Soros adding his bets everytime the UK asserted that the pound was safe.

Why the private sector is safe this time?

Because this time the crisis is not in the corporate or household sector, for example, the US household sector has improved its liability ratios for most of the past 2 decades:

Of course, we need to beware whether these households are overly long on potentially toxic AI investments...

We know that corporate balance sheets are also in sound shape, and that is why in the next debt crisis, it will not be the Corp-less-govt spread blowing out, like in past crises (blue arrows), but could be a complete opposite (red arrow):

Some govts are in much better shape (eg most of Asian jurisdictions), which allows bond issues there to still garner good demand (eg HK's Silver Bond, at 4.25% guaranteed yield, see Article 4). But we know high inflation could clip these what seem to be generous levels, so we would even avoid better quality bonds, and go straight to real hard assets, anything that the bankrupt issuers (including currencies) cannot print...

Article 1: The Treasury Is Now Supporting Its Own Debt Market

https://www.armstrongeconomics.com/armstrongeconomics101/economics/the-treasury-is-now-supporting-its-own-debt-market/

Article 2: Army to mobilise veterans in preparation for war

https://www.telegraph.co.uk/news/2026/09/07/army-to-mobilise-veterans-war-preparation/

Article 3: France’s debt crisis-in-waiting

https://www.ft.com/content/16081c0e-5471-4c00-8b12-29cac20a69d2?syn-25a6b1a6=1

Article 4: The 11th Silver Bond draws record applications in both number and value

https://www.thestandard.com.hk/finance/article/341899/

Article 5: Trump escalates trade war with Canada, moving to ban imports of some motorcycles, dairy and alcohol

https://www.nbcnews.com/business/economy/trump-escalates-trade-war-canada-moving-ban-import-autos-dairy-alcohol-rcna596666

Article 6: List of products from the United States subject to counter-tariffs effective September 8, 2026

https://www.canada.ca/en/department-finance/news/2026/08/list-of-products-from-the-united-states-subject-to-counter-tariffs-effective-september-8-2026.html