Last weekend, from June 10th to 11th, the rate of Bitcoin, the primary “digital gold,” fell by 11% and stooped below $6,400. This price was the lowest it has been in the last few months. Previously, the cost of Bitcoin ranged from $9,000 in April 2018 to $7,000 in early June of the same period. This fall caused concern about the long-term prospects of the cryptocurrency. The experts of the blockchain industry have put forth their assumptions about the reasons for such a drop in rates.
Reason 1. Attack on Coinrail
—————————————
On June 10, the South Korean Coinrail exchange reported of a hacker attack on its user accounts. The platform lost ERC20 standard tokens, such as NPER (the eponymous NPER project), ATC (Aston), and NPXS tokens (the Pundi X project). The exact amount of tokens lost to theft is unknown, but the CEO and co-founder of Pundi X Zac Cheah said that the cybercriminals stole about $40 million.
"100% of the affected NPXS tokens have been fully tracked. The exchange is now working with law enforcement agencies of Korea to investigate the account holder involved in unauthorized transactions," said Cheah.
Prior to the hacking, Coinrail was among the active and developing exchanges, but never took the lead. The trading volume of about $2.65 million led the crypto platform to 99th place in the world rating. Some outlets wrote that the price of Bitcoin fell due to problems in this exchange. But blogger and crypto enthusiast Joseph Young is confident that the decline in value is due to lack of demand and fear of losing investments.
"WSJ believes that the cost of Bitcoin has decreased by 11% after a hacking attack on a small exchange in South Korea that only a small part of local users actually worked with. Bitcoin fell due to the fact that people started selling their assets. And there were none who wanted to buy Bitcoin," Young said and adds in another message that the Koreans mixed the names of the Coinrail crypto exchange with the national railway operator Korail and panicked over the thought that they would not be able to return home because of a hacking attack on Korail.
Crypto trader Ran NeuNer expressed his ironic view on the topic of mass sales of assets by concerned users and compared the situation with the robbery of a small financial institution.
"A Korean exchange, the hundredth in the world, was hacked. Is this a reason for selling cryptocurrencies? Did you sell your dollars the last time when a small bank got robbed?" asks NeuNer. Today, three days after the attack, Coinrail reported that the exchange had agreed with one of the affected companies, TraDove, on the full restoration of the BBC tokens belonging to it. In general, the experts of the crypto exchange are working to eliminate the consequences and report on the actions taken. But the rate of Bitcoin did not rise after the accounts were frozen on the attacked exchange. The market continues to show a decreasing trend. The red bearish candle on June 10th, 2018, which speaks of a sharp drop in the cost of Bitcoin.
Reason 2. Investigation of the CFTC. Pressure from the State
————
Two days before the attack on Coinrail, on June 8th, the Commodity Futures Trading Commission of the United States (CFTC) demanded that the Coinbase, Kraken, Bitstamp, and ItBit exchange trading agencies provide data on trade for detecting alleged manipulations in the crypto market. The regulator decided to check the cost of futures for Bitcoins after the group of the Chicago Mercantile Exchange (CME Group Inc.) doubted the reality of the prices of four exchanges. After this news, the cost of Bitcoin decreased by 4.7%, and the altcoins also suffered as the price of Ethereum fell by 5.4%; EOS by 10.3%; IOTA by 9.9%.
In recent months, exchanges have become the object of close attention in connection with security problems. Due to frequent thefts, market manipulation, and money laundering, government agencies increasingly require data on trading and require KYC procedures to be applied to identify users, and the European Union has approved new AML measures. After the launch of the investigation, which is connected with the manipulation of the prices of currencies, the blockchain sector will be under more control by the government, as stated by the president of WinterGreen Research Inc. Susan Eustis, who is engaged in forecasting the digital communications technologies market.
"As the centers of cryptocurrencies have been increasingly studied in recent months against a background of a number of controversial issues, the status of Bitcoin will be undermined," says Eustis.
Reason 3. Technical Correction
———————————————
The downward trend of the market continued for several months. Therefore, the depreciation of Bitcoin on Sunday, June 10th, is unlikely to be related to the hacking of Coinrail and the investigation of the CFTC. Most likely, the cost reduction was caused by a technical correction. Senior market analyst of eToro Mati Greenspan is certain of this latest reason.
"The version that such a small hacking attack caused such a big price reaction was definitely embellished," Greenspan said.
The eToro analyst also indicated that the movement of the rate of Bitcoin below $7,000 implies a slow recovery to past values, and a rapid market rollback will be unlikely.
"Bitcoin is currently in a liquidity vacuum. The volumes on crypto exchanges are now below $5 billion a day, and these are the lowest levels since November 2017. As the trading activity is very low, even small pressure can sharply decrease the price. It is as if you are playing baseball in outer space," as Mati Greenspan made the analogy with the popular sports game for better comparison.
Technical strategist for Fundstrat Global Advisors Robert Sluymer supports the view of the long recovery of Bitcoin after its fall to a two-month low below $7,000.
"The downward trend, which began in May, still remains in force, and it will have to be reversed to signal an improvement of the situation around Bitcoin. $7,777 is the key level of cost for Bitcoin, after reaching this peak, one can speak of an increasing trend," said Sluymer.
——————————————
Don’t miss out next post! Comment, ask, upvote and follow 