@pearlpatience

Exchange hacks produce immediate liquidity shocks and confidence erosion. Short-term effects include sharp price drops, widened spreads, and withdrawal freezes as counterparties reassess counterparty risk. Magnitude depends on the exchange’s market share, the size of stolen or frozen assets, and whether insurers or other venues absorb flows. Well-capitalized markets may recover within days as arbitrage and market makers restore depth; smaller ecosystems suffer longer damage as trust deficits persist. Additionally, regulatory scrutiny often intensifies post-hack, altering custodial behavior. Monitor exchange reserve changes, deposit/withdrawal velocity, and on-chain flows from implicated wallets to assess practical damage and recovery timeline.

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