The 3 reasons that explain the collapse of bitcoin
The week was marked by a sharp drop in the cryptocurrency market, with bitcoin in the lead. There are three main reasons for this.
Bloody weekend on cryptos. Bitcoin collapses by 7% Friday night and is down 19% over the last seven days. This is not really better on the side of other cryptocurrencies, ether drops in comparable orders (-4% and 19%). Ripple, bitcoin cash or litecoin also speak the language, swept away by the plummet of bitcoin. This phenomenon has become a habit: when the king of cryptocurrency catches a cold, the whole area sneezes.
The history of bitcoin has shown that there is not necessarily need for news to plunge the courses. This is due, in part, to the sensitivity of some investors tempted to sell their crypto-assets at the least double-digit drop (and this is very common!). But these last days have been marked by major news that is likely to scare the markets. We discover three of them.
- SEC accelerates regulation
The Securities and Exchange Commission (SEC), the US Stock Exchange constable, announced on Wednesday that it recommended trading platforms to register with its services. It considers that some of them have an activity that is similar to the exchange of financial securities and thus fall under the federal law. If this is the case, they must fulfill a number of rules to operate legally on American soil (transparency of exchanges, information on customers, etc.). Otherwise their services could be blocked. That would be a hell of a tile for them: the United States accounts for 44% of global bitcoin transactions. Having access to this market is vital.
- Piracy of the 3rd largest trading platform
The cryptocurrency industry held its breath on Wednesday, when the Binance trading platform suspended withdrawals for several hours. It is the third largest in the world by volume and the hacking of MtGox in 2014 showed that a major exchange could bring down the entire market.
Binance explained the reason on his blog the next day: hackers stole access from several customers at the end of February (via phishing) and created a program to place orders remotely without their knowledge. These were passed simultaneously Wednesday to buy Viacoin, a small cryptocurrency very liquid and whose course can easily explode if enough people buy it at the same time. Their goal was to wait for the price to explode to resell their own Viacoins against bitcoins and quickly remove them from Binance. A perfect plan, on paper.
Binance says he spotted the scheme and blocked all withdrawals outside the time to identify the thugs (which was done). Their assets have been frozen. Unfortunately, victim customers will have to keep Viacoins bought without their knowledge: since no exchange has been made to the account of a pirate, they are irreversible.
This mishap shows how much attention must be paid with platform security. In this case, a two-step authentication would have prevented the hackers from committing their theft. Victims are users who did not activate it.
- The liquidator of MtGox floods the market
Attorney Nobuaki Kobayashi, the man in charge of liquidating the assets of the Japanese trading platform MtGox, revealed on Wednesday that he had sold 35,841 bitcoins for $ 362 million and 34,008 cash bitcoins for $ 45 million since December latest. This announcement is a threat to the global balance of bitcoin: the liquidator is what is called a "whale" in the crypto lexicon ("whale" in French). It has so many bitcoins that every massive sale is likely to affect the price down. At the time of the bankruptcy of MtGox, the company headed by the French Mark Karpelès held 200,000 bitcoins