Caught Between a Hack and a Regulator; Bitcoin Slumps Below $6,700
Over the weekend, Bitcoin and other cryptocurrencies have been experiencing a large sell-off because of multiple stress points in the market. According to data, over the last twenty-four hours, the market has incurred a loss of $ 47 billion USD.
After a relatively small South Korean exchange, released a statement acknowledging a hack and theft from their platform, Bitcoin slumped 10% hitting its lowest ever value in the past two months. The price took a further slump after the CFTC issued a probe into market manipulation.
Here is a closer look at what happened over the last 24 hours.
On Sunday Coinrail, a small South Korean cryptocurrency exchange, announced on Twitter that their platform had been compromised and a lot of lesser-known altcoins had been stolen. The exchange was predominantly used for trading small tokens like the EOS token and the Pundi X token, etc.
In the statement released by the exchange, there was no mention of how much was lost in the hack and theft, however, sources close to the exchange are speculating that the loss is something to the tune of $ 40 million USD.
Another interesting thing about the statement that the exchange released was that there was no mention of there having been any theft of leading cryptocurrencies like Bitcoin, Ethereum or Ripple and yet all three of these coins, along with a hundred others, saw massive slumps in prices.
CFTC Demands Trading Data From Leading Exchanges
Another rather interesting development that happened over the weekend was the American Commodity Futures Trading Commission issuing a probe into possible market and price manipulation with regard to futures by leading cryptocurrency exchanges among which are names like Coinbase, Kraken, etc.
The CFTC has asked for extensive access to their trading history and client data to ensure that there is no market manipulation and when they received data from the said exchanges they were only provided with a trading history of a couple of hours and were not given the access that they were expecting to be offered.
The CFTC, in fact, had sought the data from these exchanges back in January itself. However, the said exchanges refused to comply and release their records citing that the CFTC was being too intrusive into their businesses.
So what is the reason for the price slump? The hack or the CFTC Probe?
Over the last twenty-four hours, bitcoin has touched its lowest value in the last two months after recovering from a sluggish Q1 price. The cryptocurrency, after seeing astronomically high values in December, faced a large amount of loss in the months following and had just seemed to have started to settle down.
However, with the combined pressure of a hack and a CFTC Probe Bitcoin succumbed to it lowest ever value at $6766 (at the time of writing). Which one of these reasons is the cause for this sell-off?
Sell-offs is a normal market reaction to a hack. Because any centralised exchange on which users store their cryptocurrencies is susceptible to hacks and theft. This is because of the lack of robust security systems that are in place. While hacks are becoming more common, the market reaction is also becoming more and more predictable, but this hack was of a very small South Korean exchange that, realistically speaking, could not have been the ignition for such a large, global sell-off.
While it now becomes a common practice for investors to have mass sell-offs at the drop of a hat over an exchange’s announcement of a hack, it is unusual this time around because the statement released by the exchange said nothing about the crypto big-wigs; Bitcoin and Ethereum.
Another very interesting development is the CFTC probe into leading cryptocurrency exchanges like Coinbase for market and price manipulation in futures trading. The massive cut in market cap that nearly all of the top 100 cryptocurrencies have incurred over the last twenty-four hours is also being attributed to this announcement and the unwillingness of the exchanges under the scanner to share their trading data.
Which reason do you think is more likely to be the root of this massive sell-off? How long do you think Bitcoin will take to recover from this slump? Let us know in the comment section below.