Bitfinex Hack to Blame for Massive Bitcoin Price Drop
After a steady week of hovering in the $650 range, the bitcoin price has been dealt a massive blow. Investors and enthusiasts were shocked to discover that the world’s favorite coin had fallen by more than $100 into the low $500s. At press time, the price has rebounded, and hovers around $571, a near $200 drop since reaching a high of $700 just a few months ago. Community consensus on the cause of the drop points the blame at Bitfinex, losing around $65 million in bitcoin after being hacked.
Also read: Japan: The Newest Bitcoin Price Influencer?
Bitfinex Tanks the Market
One source explains that the horror is not yet over, and coin-lovers should brace themselves for what is likely to be another bruise-inducing tumble:
“Although the market seems to have found a bottom, there is not yet any technical reason to believe the decline is complete. Now is the time to count your money and sit out of the market for a few days or weeks… This analyst’s position remains that external and fundamental events do not determine the direction of price movement – the movement is generated by active buyers and sellers in the market, and the direction of movement is determined by their persuasive social mood. It was posted here two weeks ago that the long-term charts indicate a looming downtrend. Many readers were irked by the analysis, yet in the meantime, market participants found various catalysts and ‘good reasons’ to sell. The majority’s impulse to sell (or buy) is based on their collective psychology – social mood – whether positive or negative (as in this case)… Will there be more downside? We cannot know for sure.”
But others are suggesting specific reasons for the drop. Among them are the yuan’s devaluation, hard-fork insecurity (thanks, Ethereum) and the recent Bitfinex hack that left nearly $70 million missing from one of China’s largest bitcoin exchanges.
It’s a likely culprit: again, questions regarding bitcoin’s safety are being triggered and entering doubters’ heads, and many are pointing out that the price drop occurred almost directly after the hack took place. In fact, the present number is considered something of a rebound after a brief period when bitcoin was being traded at about $480 in Hong Kong.
“The theft is being reported to – and we are co-operating with – law enforcement. We are deeply concerned about this issue, and we are committing every resource to try and resolve it.”
The theft took place mere weeks after another major cyber-attack occurred on Ethereum’s platform, which resulted in the loss of nearly $60 million in Ether funds. Several have witnessed their accounts drained, and all trading on the exchange has been halted until further notice.
Will bitcoin rise or drop in the coming weeks? Post your thoughts and ideas below!
Images courtesy of Bitfinex, The Merkle.