First Mover: Bitcoin Surges to New 2020 High as Harvest Debacle Provides Costly DeFi Lesson

Bitcoin reached a new 2020 high of around $13,420 after rising on nine of the past 11 days.

The cryptocurrency’s recent rally despite a stalling of U.S. stocks has rekindled speculation that prices for the two asset classes are starting to diverge after a recent stretch in which they appeared highly correlated.

“We have discussed the potential for a decoupling from traditional financial markets,” analysts for the blockchain data firm Glassnode wrote Monday. “It is too early to tell.”

Matt Blom, head of sales and trading for Diginex, said bitcoin bulls might try to push prices by the end of October above $13,863, the current record for an end of month price. After that, the next price target would be the 2019 high of $13,868.

In traditional markets, U.S. stock futures pointed to a higher open, even as lawmakers departed Washington to campaign, an apparent death knell for last-ditch efforts to pass an economic stimulus package prior to the Nov. 3 election.

Market moves

The fast-evolving realm of decentralized finance, or DeFi, has attracted large sums of money this year from venture capitalists and traders alike. At last count, some $11 billion of bitcoin and other cryptocurrencies had been socked into the semi-automated, blockchain-based trading and lending platforms as collateral, a 16-fold increase since the start of the year.

But every month or so, the fledgling industry produces a debacle so suddenly and bizarrely that sane observers have no choice but to step back and remember that the whole exercise is really just a giant game, played with real money. Or a laboratory. Or both.

Such was the case with the latest exploit to hit DeFi: the siphoning off of the equivalent of $24 million in digital tokens from a protocol called Harvest Finance.

As reported by CoinDesk’s Will Foxley, an attacker used a complex and sophisticated strategy involving “flash loans” and a series of arbitrage trades involving the DeFi protocols Uniswap, Curve and…

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