Bitcoin Nears $6000 Amidst Growing Market Distrust
Despite the positive news of Mt Gox trustees no longer being allowed to sell off Bitcoin assets, a year’s worth of exchange hacks seem to have diminished investor trust in cryptocurrency.
For the first time since the $5922 low of February this year, the price of Bitcoin (BTC) is nearing the significant support point of $6000.
This year has seen a huge amount of digital assets lost to exchange thefts, including the largest in history so far – Coincheck’s $534 million hack back in January. Other devastating hacks include that of the $150 million BitGrail hack the following month and most recently the $40 million Coinrail hack and $31 million Bithumb hack.
While exchange thefts have certainly increased since the massive cryptocurrency bull run of late 2017, previous years were not immune either. Following the 2014 Mt Gox hack, the year 2015 opened with Bitstamp being taken for $5 million in Bitcoin, an amount that would be worth $120 million today. Next was BitFinex in 2016, losing $70 million in Bitcoin (a potential $800 million in today’s prices), coincidentally the same amount NiceHash were robbed of just one year later in 2017.
Not only do these continuing thefts cost exchanges millions of dollars, they rattle investor confidence and often instigate market-wide panic sell-offs.
Victims of the Mt Gox theft have only today received the first sign of good news regarding a potential refund of their lost investment and it could still be a year before they receive any of it.
Increased regulation by countries like Japan, China and the U.S are also putting strain on cryptocurrency adoption. The news today of Japan’s largest exchange bitFlyer having to cease the creation of new accounts due to stricter legislation may well have been responsible for Bitcoins sudden drop. Allegations of insider trading, market manipulation and fraud have all drawn criticism from regulatory bodies who are scrambling to inject some level of control into the industry.
Other forms of cryptocurrency theft including cryptojacking, illegal mining operations and fake ICO’s have all been prevalent this year. A number of arrests have been made in Asia and the U.S, with the latter mostly focused on fake and unlicenced cryptocurrency operations with the former clamping down on illegal mining and similar operations.
It’s not all doom and gloom though, with this year seeing a number of positive blockchain projects being rolled out in developing African nations. Countries with struggling economies like Zimbabwe and Kenya are starting to reap the benefits of digital assets and decentralized ledger technology.
Stronger security measures implemented by exchanges and cryptocurrency platforms are key to solving the issue of thefts and increasing investor fears. In addition, well-planned and properly implemented regulation from authorities is necessary for stable growth within the industry.
Let’s hope both parties can achieve these goals before prices slide even further.
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