The crypto bloodbath enters its fourth day, with bitcoin down another 4.6% to $6,464. The only comfort in that number is that it isn’t as bad as the rest of the crypto world, where top tokens have plummeted 10%.
Litecoin is now under $100 at $94, Ethereum $480 and fifth-placed coin EOS is down 10% to $9.87. Ethereum Classic which has seen a 25% run up since it was announced by Coinbase that it was to be listed. ETC is trading at $13.43.
EOS mainnet, although functioning for voting, still hasn’t been fully activated because not enough token holders have voted, with only 37 million out of the 150,000,000 required to reach the 15% threshold.
Total crypto market cap has slid to $276 billion. Bitcoin has lost support at $6,600 with the next stop likely to be at $5,900. The pain may not end until bitcoin is deep into the $5,000s, which would take the price back to where it was in November, before some would argue the real madness began with the mega rally to $20,000.
The latest episode of the bear market that never really went away has been triggered by the hacking of smallish South Korean exchange Coinrail.
It is perhaps indicative of the make-up of the current marketplace where more short-term retail investors are thought to be more active according to analysis carried out by Chainlysis. Here’s an excerpt from the findings in a feature by the Financial Times:
The Chainanlysis data quantifies this distinct shift in the make-up of bitcoin owners from longer-term investors — those who held the asset for more than a year — to short-term investors who have traded more recently, by analysing how regularly coins have changed hands.
Last November — before December’s pricing peak — the amount of bitcoin held for investment was roughly three times that held by traders.
However, by April 2018, the data show the amount held by investors — about 6m bitcoin — was much closer to the amount held by short-term speculators, with 5.1m bitcoin.
Indeed, Chainalysis estimates that longer-term holders sold at least $30bn worth of bitcoin to new speculators over the December to April period, with half of this movement taking place in December alone.
It is difficult to gauge when the bleeding stops but it will be at around the $5,000 level that bitcoin miners will start to feel the bitcoin miners begin to feel the pain; this is the level when starts to become uneconomic to mine the cryptocurrency, although difficulty is likely to decline if network usage drops which would reduce mining costs but probably not enough to compensate for the losses on price depreciation.
Back in South Korea, Coinrail admitted two days ago that it had lost $37.2 million worth of customers’ funds. Although the exchange is a not a major player, the hack reminds investors of the risks that surround the industry and will further heighten fears about regulation, even though it is a necessity in order to make exchanges more secure.
Japanese exchange Coincheck was hacked in January leading to the loss of $500 million in clients funds store in the form of the NEM token.
Newer exchanges such as Binance seem to have fared much better in terms of handling security risk.
Gary has been writing about cryptocurrencies since 2013 and currently works as the cryptocurrency analyst at interactive investor, the UK’s second-largest online investment platform. Gary contributes for Coin Intelligence News in a personal capacity and none of his commentary should be considered investment advice. Gary is the winner of the ADVFN International Financial Awards 2018 Cryptocurrency Writer of the Year. Contact Gary on twitter at: @gary_mcfarlane