- Humanity Protocol token price jumped after its recent hack.
- The developers shared details on how this hack happened.
- History suggests that this rebound may be a dead-cat bounce.
The Humanity Protocol token rose for fourth consecutive day as investors bought the dip following the recent hack. H token jumped to a high of $0.3470, up by 345% from its lowest point this year. Still, there are signs that this rebound could be a dead-cat bounce that may lead to a crash.
Humanity Protocol Token Jumps After Hack
The H token price has jumped sharply in the past few days as investors bought the dip. This rebound follows a 90% crash experienced this week when a hacker compromised the network, stealing over $30 million on the token’s BSC chain, and starting minting.
A report released by QuantStamp explained what happened. The hacker compromised one of Humanity’s director’s key by sending a phishing email impersonating Bithumb. After he opened the link, the hacker received full control of the machine, copied wallet data and private keys from the device, and used them to attack.
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The H token contract on Ethereum is safe as it was frozen. However, the BSC deployment was permanently compromised as the attacker still has administrative control and can continue to mint. In total, the hacker stole 141.18 million H tokens and continues to mint on the BSC Chain.
This attack shows the risks involved when investing in cryptocurrencies like Humanity that are highly centralized. This is a significant contrast to other large decentralized networks like Bitcoin and Ethereum.
H Crypto Rally May Be a Dead Cat Bounce
Still, while the Humanity Protocol token may keep rising, there is a risk that this is a dead-cat bounce (DCB). A DCB is a situation where an asset in a freefall rebounds temporarily and then resumes the downward trend. It is also known as a bull trap.
A closer look at some of the top tokens that have gone through hacks shows that they normally crash, rebound, and then resume the downtrend. A good example of this is Mantra, whose token crashed in April last year. It initially dropped to $0.3910, and then rebounded to $1.10 within days. Today, the token has crashed to $0.01.
One reason why this crash happens is that investors who strongly believes in a cryptocurrency often dump it after the initial crash. These investors will likely never buy it again. Also, new traders will likely avoid investing in the coin, fearing a repeat of the hack since these phishing risks still remains.
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