Bitcoin Holds Near $65,000 Amid BTCPay Server Vulnerability and Fork Risks

Bitcoin traded steadily near the $65,000 level on Saturday, showing resilience as investors assessed two separate security risks impacting the network's infrastructure. The developments include a critical vulnerability in a popular payment processor that resulted in confirmed fund theft and the potential for a chain split from a contentious software proposal.

BTCPay Server Exploit Leads to Stolen Funds

A significant vulnerability was exploited in BTCPay Server, a widely used open-source Bitcoin payment processor. According to the project, attackers were able to steal credentials, known as “macaroon” files, that grant control over Lightning Network nodes running LND software.

This access allowed the attackers to control Lightning wallets, close payment channels, and transfer funds. BTCPay confirmed the exploit late Friday and urged operators to immediately update to version 2.4.2 or take their servers offline to prevent theft. While the total amount of Bitcoin stolen has not been disclosed, hardware wallet maker Foundation and Bitcoin publication Citadel21 both reported that their BTCPay Lightning nodes were drained.

• The vulnerability affected Lightning nodes running LND software within BTCPay.
• Standard on-chain wallets generated by the software were not directly affected.
• An official post-mortem is expected after operators have had time to apply the security patch.

Potential Network Split Poses Replay Attack Risk

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Bitcoin holders are also monitoring a separate risk related to the proposed BIP-110 software fork, which could activate this weekend around block 961,632. The proposal aims to temporarily limit non-payment data in transactions, but it has garnered minimal support from miners, with signalling near just 2.6% against a required 55% threshold.

Despite the low support, nodes running the BIP-110 software are programmed to reject blocks that do not signal for the update once the activation height is reached. This could create a minority chain, effectively splitting the network. Such a split introduces the risk of replay attacks, where a signed transaction for one chain could be broadcast and validated on the other, potentially leading to an unintentional loss of funds for users selling coins from the forked chain.

Market Reaction

Despite the security concerns, the broader cryptocurrency market remained relatively stable. As of early Saturday, Bitcoin was trading at $64,986, a gain of 0.61% over the previous 24 hours, according to Investing.com data.

Other major cryptocurrencies also posted modest gains. Ethereum (ETH) climbed 0.32% to $1,916.82, while Solana (SOL) rose 2.16% to $74.78. The market's muted reaction suggests investors may be waiting for more clarity on the full impact of the BTCPay vulnerability and the likelihood of a disruptive chain split.