Bitcoin surged 40% in the third quarter, closing at $83,251.45, outperforming nearly every major asset class. Even as U.S. Treasury yields climbed to their highest level in more than two decades, capital continued to pour into exchange-traded funds (ETFs) tied to Bitcoin and other tokens, with some altcoins posting even larger gains, leading many analysts to conclude that a new bull market has arrived.

But behind this rally, the long-standing security vulnerabilities of the crypto industry are also expanding in tandem. According to data tracked by crypto security firm CertiK, the third quarter saw 247 security incidents in the cryptocurrency sector, causing $1.26 billion in losses; cumulative losses so far this year have reached $2.68 billion. Although these losses are relatively small compared to the capital inflows generated by ETFs, the damage to the industry's reputation is harder to overlook.

Hacker Attack Losses Continue to Mount

September became one of the worst months, with 99 incidents recorded, the most since February 2025; the amount stolen that month reached $768.5 million, setting a single-month record since 2026. CertiK stated that these figures indicate security issues remain deeply embedded in the industry, and the threat landscape can shift rapidly in a short period of time. Nicolai Sondergaard, a senior research analyst at Nansen, said such incidents "do create a negative perception," and reputational damage can sometimes outweigh the actual losses themselves. Repeated attacks reinforce the impression that crypto infrastructure is "fragile in operation," thereby slowing institutional adoption, increasing scrutiny from regulators and custodians, and forcing capital allocators to demand higher risk premiums.

However, Sondergaard also noted that these losses still appear limited relative to the capital flowing into the market through ETFs. Most institutional investors buy crypto assets through regulated, familiar packaged products rather than directly entering decentralized finance (DeFi) protocols, which to some extent reduces their direct exposure to underlying security incidents.

Insurance Coverage Remains Insufficient

The crypto industry's insurance "safety net" remains relatively limited and is shrinking relative to risk. CoinGecko's "2026 Crypto Security Report" released at the end of August showed that on-chain crypto insurance coverage capacity stood at $130.2 million, down 20.2% from $163 million last year. CoinDesk also noted earlier that the insurance industry as a whole is still struggling to keep pace with the expanding risks facing crypto assets. Beyond security pressures, artificial intelligence is also introducing new threats. Oliver Carding, marketing director at Tesseract Group, said in an email that his longer-term concern lies in the speed of attacks: AI tools are automating the search for smart contract vulnerabilities, work that previously often took skilled engineers months to complete, meaning the window for developers to patch vulnerabilities has been significantly compressed. Security firm Blockaid expects multiple security incidents involving AI agents in the future, with "prompt injection" most likely to become the attack path, in which hidden instructions trick AI agents into acting against users' intentions.

Overall, the bull market may have returned, but malicious actors seeking to exploit vulnerabilities for profit are also making a comeback in tandem, and industry security will remain one of the core risks the market watches.

Bitcoin Strength Coexists With ETH/BTC Weakness in Market Structure

In terms of market structure, Bitcoin continues to lead, while Ethereum's relative strength trend against Bitcoin has cooled. Trading charts show that the Ethereum/Bitcoin (ETH/BTC) ratio listed on Binance, after rising rapidly in July and August, has recently stalled in upward momentum, repeatedly failing to hold above 0.033 before entering sideways consolidation, and its original bullish trendline has also been broken. Technically, this change has brought the Ichimoku Cloud into the market's focus. If ETH/BTC effectively breaks below the cloud, it would confirm a bearish trend reversal and point to Ethereum re-entering a downtrend relative to Bitcoin. For the crypto market, this means capital may continue to favor assets with stronger institutional allocation characteristics such as Bitcoin, while the relative performance of altcoins and Ethereum may face greater divergence.