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Cryptocurrencies Poised for a Comeback Despite Bithumb Hack, Says Charlie Lee

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The latest hack of a South Korean cryptocurrency exchange does not change the market fundamentals for bitcoin or other digital currencies, Charlie Lee told CNBC in an interview on Wednesday. What’s more, the Litecoin founder believes cryptos are poised for a comeback – the only question is when.

Charlie Lee Weighs In

Cryptocurrency prices declined by as much as $8 billion Wednesday on news that South Korea’s Bithumb exchange was attacked. As Lee pointed out to CNBC, investors’ initial reaction was typical given the sentiment-driven nature of the market. The hack of Bithumb or any other digital currency exchange does not affect bitcoin’s underlying value.

“If the exchange does not protect the coins well enough and gets hacked, it doesn’t really change the fundamentals of the coin they are protecting,” he said.

With respect to security, exchanges still have “a lot to improve,” Lee said before adding that strides were being taken to prevent further attacks from taking places. In the case of Bithumb, the company reportedly spent 10 billion won on new security measures recently and beefed up its IT staff far beyond the threshold required for financial institutions.

The latest Bithumb heist resulted in the loss of nearly $31 million of cryptocurrency. The exchange halted deposits and withdrawals and shifted existing balances into cold storage as it investigated the matter. The attack caught the attention of South Korea’s financial regulators, who announced plans to expedite stricter regulations governing digital currency exchanges.

Typical Bear Market

Despite bitcoin’s massive correction over the past six months, it is still doing “really well,” Lee said, reminding investors that bear markets in cryptocurrency are nothing new. However, the difficulty with bitcoin is determining how long the bearish reversal will last.

“This one could be a three to four year market or it could recover tomorrow,” he said.

Analysts have offered a multitude of explanations for bitcoin’s half-year price collapse. Some are convinced that it was caused by the introduction of futures contracts, which allow traders to more easily short the market when this option was virtually impossible before. Others have pinned the blame on bitcoin whales, whom they say have been gradually winding down their positions since the futures contracts launched in December.

Speculation that Tether (USDT) has been artificially inflating bitcoin’s value through Bitfinex has also been posited as a potential cause for the six-month price collapse. The company’s recent audit, which has been labeled “phony” by many in the blockchain community, has only fueled accusations of impropriety. However, as Hacked’s James Waggonner pointed out, Bitfinex would have had to spend millions just to inflate bitcoin’s value by four basis points.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.6 stars on average, based on 670 rated postsSam Bourgi is Chief Editor to Hacked.com, where he leads content development for one of the world's foremost cryptocurrency resources. Over the past eight years Sam has authored more than 10,000 articles and over 40 whitepapers in the fields of labor market economics, emerging technologies, cryptocurrency and traditional finance. Sam's work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Contact: sam@hacked.com Twitter: @hsbourgi




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Altcoins

Crypto Market Cap Plummets $42 Billion Over Six Days as Bitcoin Targets $5,000

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A staggering selloff in the cryptocurrency market over the past six days has investors searching for an elusive bottom on major assets like bitcoin, bitcoin cash and Ethereum. However, the breakdown of key technical levels, combined with the complete disregard for fundamentals, suggest the bottoming process has not yet concluded.

Crypto Selloff Deepens

The combined value all coins in circulation broke below $169 billion on Monday for the first time since October 2017. The selloff broke the floor wide open on last week’s bottom of $175 billion, setting the stage for a deeper correction in the short-term.

Trading volumes across major exchanges rose over the 24-hour cycle to reach a high of $17 billion, according to CoinMarketCap. In terms of adjusted volumes, Binance was the largest cryptocurrency exchange with daily turnover of $1 billion. OKEx processed $939 million worth of transactions, based on latest available data. Both exchanges saw their daily turnover jump more than 67%. Bitfinex experienced the most dramatic upsurge in volume, as turnover spiked 243% to $503.6 million.

OKEx was in the spotlight for all the wrong reasons Monday, as users lashed out against the exchange for prematurely closing open positions on bitcoin cash futures contracts. The closing of the contracts on Nov. 14 occurred without warning, leading to sizable losses across its userbase. The decision to force early settlement reflected ongoing confusion about how to handle the bitcoin cash hard fork.

Kraken has already credited bitcoin SV tokens to existing BCH holders but has warned of extreme risks of trading the new coin. In a Sunday blog post, the exchange described a number of “red flags” associated with SV, including a lack of wallets to support replay protection and “temporarily constrained” supply. It’s also likely that a large chunk of BCH SV holders will dump the currency with any notable price increase.

Bitmain founder and ardent ABC backer Jihan Wu has publicly expressed his desire to dump SV as quickly as possible.

“I am wondering when I can deposit my BSV token into exchange to sell,” the billionaire tweeted Saturday.

Battle Over Bitcoin Cash Intensifies

The battle over bitcoin cash has direct implications on bitcoin, the leading digital currency whose market cap has plunged by nearly $20 billion over the six-day selloff. Craig Steven Wright, one of the main backers of the bitcoin SV chain, has threatened to tank BTC if its miners switch over to bitcoin ABC, which is the main implementation of the BCH hard fork.

Bitcoin is also being influenced by Roger Ver’s decision to divert the entire bitcoin.com mining pool to ABC, a move that angered some users who say they never intended to mine bitcoin cash. The hash war exposes bitcoin cash to security risks as pools associated with bitcoin SV chain mine threaten to mine empty blocks or carry out 51% attacks. According to CCN, several pools and individual miners are likely to take an opportunistic approach via chain surfing, which automatically changes between chains based on block difficulty.

Price Outlook

In the meantime, market observers have set a new price target for bitcoin at $5,000. Based on latest price action, a drop below that level is likely in the short-run as the psychological $5,000 support comes under attack.

As for bitcoin cash, prices hemorrhaged another 8% on Monday to reach a new seven-month low of $352. The fourth-largest cryptocurrency is down a whopping 33% compared with last week – losses that outpaced all major cryptocurrencies in the top-20. BCH risks a further drop to the low $300s and possibly below that threshold should the hash war continue unabated.

Ethereum emerged as one of the biggest losers of the Monday selloff, with declines exceeding 11%. Ether is currently trading hands at $155, the lowest since May 2017.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.6 stars on average, based on 670 rated postsSam Bourgi is Chief Editor to Hacked.com, where he leads content development for one of the world's foremost cryptocurrency resources. Over the past eight years Sam has authored more than 10,000 articles and over 40 whitepapers in the fields of labor market economics, emerging technologies, cryptocurrency and traditional finance. Sam's work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Contact: sam@hacked.com Twitter: @hsbourgi




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Analysis

Crypto Update: New Bear Market Lows Across the Board

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The key long-term breakdown in the cryptocurrency segment that we observed last week continued in earnest today, with most of the majors hitting new bear market lows amid another wave of heavy selling. Bitcoin dropped below $5200 for the first time since last October, Ethereum violated the key $160 level, Litecoin plunged below $38, with only Ripple and Stellar.

The post-breakdown bounce faded as we expected, and today’s broad selloff took the total value of the market below $175 billion, and for now, our trend model still shows and overwhelmingly bearish picture. With that in mind, traders and investors should still not enter new positions, with both the short- and long-term downtrends clearly being intact in the segment.                

BTC/USD, 4-Hour Chart Analysis

Bitcoin is testing last week’s spike low currently after giving back all of its post-crash bounce, and spiking to a marginal new low in the process. The most valuable coin is down by 5% today, and although percentage-wise BTC is outperforming the smaller coins (which are down by 10% on average), from a technical perspective, it’s also in a highly negative setup.

Bitcoin will likely test the key support zone just above the $5000 level soon, and given the segment-wide trends, a push below that is likely in the coming weeks, with the next key support zone found between $4450 and $4500, and with short-term resistance now ahead near $5650.

ETH/USD, 4-Hour Chart Analysis

Despite the weak positive sings last week, Ethereum is now under heavy selling pressure, and the coin has been leading the whole segment lower today, plunging below the key $160 level, and testing the $150 level too. The bearish long- and short-term trends are intact, and traders and investors should still stay away from the coin, as a move towards the next key support zone near $130 seems likely in the coming weeks.

Ripple Holds on Above Key Long-Term Support

XRP/USDT, 4-Hour Chart Analysis

Ripple continues to withstand the segment-wide selling pressure, and it remains the only major coin not on a long-term sell single in our trend model, while firming its spot as the second most valuable coin due to the persistent weakness of Ethereum. That said the short-term picture remains negative, even with the coin trading clearly above the key $0.42-$0.46 long-term support zone.

For now traders and investors shouldn’t enter new positions, but long-term investors should still hold on to their coins, even considering the strong bear market in the other top coins. Further support levels are still found near $0.375 and $0.355, while resistance is ahead at $0.51, $0.54, and $0.57.

LTC/USD, 4-Hour Chart Analysis

After being stuck below the $44 support/resistance level during the bounce, Litecoin, one of the leaders of the bear market, quickly violated the next major support level near $38, once again confirming its weakness. Now, a move to the next support zone near $34.50 seems likely, and given the coin’s relative weakness, traders shouldn’t try to catch the falling knife yet.

XMR/USD, 4-Hour Chart Analysis

While Monero has been holding on above its prior bear market low near $80 until today, the coin was already on a sell signal on all time-frames, and today, it plunged below the key level, due to the sharp selloff in early trading.

Should the breakdown hold, the re-test of the $60 support would be very likely as there is now other support level between the two major zones. With that in mind, traders and investors shouldn’t enter new positions here, and the declining trend is firmly intact in the coin’s market.

Featured image from Shutterstock

Disclaimer:  The analyst owns cryptocurrencies. He holds investment positions in the coins, but doesn’t engage in short-term or day-trading, nor does he hold short positions on any of the coins.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.6 stars on average, based on 398 rated postsTrader and financial analyst, with 10 years of experience in the field. An expert in technical analysis and risk management, but also an avid practitioner of value investment and passive strategies, with a passion towards anything that is connected to the market.




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Bitcoin

Bitcoin Price Crashes to New 2018 Lows as Selloff Resumes

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Bitcoin and the broader cryptocurrency market slumped anew Monday, setting the stage for a prolonged downturn that could open the door to new support levels being breached.

Market Update

The bitcoin price crashed nearly 8% on Monday to reach a new yearly low of $5,180 on Coinbase. At the time of writing, the BTC/USD exchange rate was valued at $5,126, down 7.1% compared with the previous day.

The leading digital currency is trading at a premium on Bitfinex, which last quoted the bitcoin price at $5,231.

Aggregate pricing data courtesy of CoinMarketCap shows a price-per-coin of $5,199 for a total market capitalization of $90.4 billion. That’s the lowest in 13 months.

Daily trading in BTC rose sharply on Monday, reaching a high of $5.6 billion. Derivatives trading platform BitMEX continues to dominate the bitcoin market, processing more than a third of the daily transactions.

At current values, bitcoin accounts for 53.3% of the entire cryptocurrency market, which is collectively worth $169.5 billion.

Hash War Continues

Bitcoin’s precipitous drop began early last week as bitcoin cash, the fourth-largest cryptocurrency, devolved into an all-out civil war. The bitcoin cash hard fork, which was executed Nov. 15, resulted in the creation of two competing chains vying for control of the network. The so-called hash war between bitcoin ABC and bitcoin SV continues to this day. And while the primary implementation (ABC) has the upper hand, backers of the competing SV protocol have vowed to continue fighting for the long haul.

In the meantime, cryptocurrency exchanges have struggled to execute the chain split, with some platforms taking an entirely different direction than the one they stipulated prior to the hard fork.

The Hong Kong-based OKEx exchange faced severe backlash Monday after it changed the terms of its bitcoin cash futures contracts without warning. As Bloomberg reports, the exchange forced the early settlement of BCH contracts on Nov. 14, resulting in severe losses for some of its traders. The firm had $135 million worth of BCH derivatives contracts on the books at the time of the forced settlement.

The outcome of the bitcoin cash hard fork will have direct implications on BTC and the broader cryptocurrency market. Craig Steven Wright, one of the main backers of SV, has threatened to crash bitcoin’s price all the way down to $1,000 if BTC miners switch to mining BCH.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.6 stars on average, based on 670 rated postsSam Bourgi is Chief Editor to Hacked.com, where he leads content development for one of the world's foremost cryptocurrency resources. Over the past eight years Sam has authored more than 10,000 articles and over 40 whitepapers in the fields of labor market economics, emerging technologies, cryptocurrency and traditional finance. Sam's work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Contact: sam@hacked.com Twitter: @hsbourgi




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