Media says Bitcoin drop due to Coinrail hack, I'm not so sure

in bitcoin •  4 months ago

Just about every news piece that has come out related to Bitcoin's recent drop says the reason is due to the hack of the Coinrail exchange.

That might seem like a possible reason on first glance, considering that exchange hacks have caused some of the biggest price declines in bitcoin's short history.

In fact, the Mt. Gox hack was mostly responsible for one of the biggest price declines in bitcoin's history, when bitcoin fell something like 90% over the course of the Mt. Gox hack to its eventual shut down.

However, Coinrail is no Mt. Gox.

In fact, it isn't even close.

Coinrail isn't Mt. Gox:

(Source: https://www.japantimes.co.jp/news/2017/11/30/national/crime-legal/bitcoins-surge-little-comfort-burned-mt-gox-clients-international-legal-limbo/#.Wx6w9PlKiM8)

Coinrail is the 99th largest cryptocurrency exchange in terms of volume. It averages roughly $2.6 million in transaction volume per day.

Mt. Gox was the largest crypto exchange in the world when it got hacked, for some perspective.

It isn't entirely clear how much money was stolen during the Coinrail hack, but early estimates are saying somewhere in the neighborhood of $37 million USD.

That may sound like a good sized number on first glance, but keep in mind that crypto markets dropped by over $40 billion last night.

That is billion with a "B".

Hard to imagine that a little crypto boutique that trades roughly $2.6 million per day could cause a $40 billion dollar drop.

My belief is that the Coinrail hack was merely the straw that broke the camel's back, so to speak.

Bitcoin was at a critical point technically (on the charts), the lower end of a triangle who's range was getting ever narrower, indicating a breakout in either direction was likely imminent.

(Source: https://cryptomonster.net/technical.html)

This news likely pushed prices just below that lower support line which in turn caused a lot of technical bearish indicators to trigger, which in turn caused a lot of selling.

So, you get a slight down move because of the negative news, but then you get a ton of technical selling on top of it, which sends prices down $1,000 on the day and wipes out over $40 billion in total market cap.

The timing of the announcement somewhat confirms this as well, check out the chart:

(Source: https://www.ccn.com/bitcoin-price-bloody-sunday-not-caused-by-coinrail-hack/)

That circled region was right after the news of the Coinrail hack was made public. However, the big drop didn't happen for some time later once prices started to break technical support levels.

Strong circumstantial evidence that the Coinrail hack was merely the straw that broke the camel's back as opposed to the outright cause.

Going forward:

The reason for the drop doesn't really change anything all that much currently, but it does matter going forward.

Given that nothing about bitcoin's story has changed materially in the last 24 hours, this is likely just a minor hiccup on the path to where bitcoin is ultimately headed over the next couple years.

Which, in my opinion, is much higher.

The time frame of that happening may have just got pushed back a couple months is all.

Stay informed my friends.

Image Source:

http://scienews.com/bitcoin/5082-bloody-sunday-why-falling-bitcoin.html

Follow me: @jrcornel

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I think it might partially be because of the subpoenas that relatively big crypto exchanges like Coinbase and Bitstamp recently received from the CFTC.

From the linked article:

The CFTC has subpoenaed 4 cryptocurrency exchanges for their investigation into trading fraud in cryptocurrency markets. The subpoena is for the release of trading data to prevent of skewed prices in the CME Futures market.

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That news was out well before the selling started. Perhaps there was some delay if that truly was part of the cause?!

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Did that happen some time before the date of that article? I was under the impression that it was hot off the press, dated June 9, 2018, which is only a day before the drop happened.

If it really was fresh news just two days ago, I wouldn't be surprised about a 24 hour delay on market reaction. Sometimes news takes a while to spread, especially if it isn't covered by a lot of feeds.

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Agreed. I think it very much has to do with the crackdown regulations as crypto enters the mainstream. Besides the four exchanges, lots of others got subpoenas too. The retail mania has been quashed, now the institutions are going to enter and dominate the space on their (mostly unfavorable) terms. Opinion.

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There is probably a lot of truth to this ^

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I share your sentiment and I've been expecting this to happen for many years now, ever since I made my first investment into bitcoin in 2015. We're entering a necessary stage of bitcoin's growing pains, something that has to happen before widespread adoption has any chance of occurring.

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Can the Ocean of Public Demand make it through the garden hose of regulation?

If so we can rest assured the status quo will prevail.

Now if the hose bursts at the seams and self-regulated freedom spills out all over the place, it will be very hard to put the genie back in the bottle.

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that definetly could be the case @jamesbrown

investors need more confidence and those hacks and subpoeanas are not helping

Cheers,
Piotr

Good info! Thanks @jcornel 👍

I literally just wrote an article about how there is actually some positive news in the media at the moment and this hack ”shouldn’t” of really done this if anything to the markets - agreed completely either automated bearish trading or people are stupid and think hacks aren’t going to happen

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Yea, there has been a lot of positive news lately. Been a bit surprised it hasn't been able to push the market up at all. This drop couldn't have solely been caused by a micro exchange's hack.

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Bless em but it’s true it is a micro-exchange and a small hack shouldn’t motivate selling and people love to talk about the negatives and not the positives - anyone pushing this as a reason is either being paid to push it or seriously inexperienced with this market.

EDIT - Anyone selling because of this hack is also - inexperienced

They acting'

So much FUD all the time. Amazing how easy it is to get all the steeple panicking.

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And now that Wall Street is involved... yikes.

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Crypto needs the Amazon or Tesla effect. Negative news means nothing to those fan boys.

... just part of the continued trend of crypto getting dumped left, right, and center

Thanks for sharing .. Good news friend

That's a great information sir..
I
Love
It
Bitcoin

When you expected $20k BTC and the price plummets...

This really sucks for me in the short term. It puts a kibosh on my two month out expectations.

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Same here. Just pushed the next bull run out by at least a few months in my opinion, possibly longer.

Maybe this was a coordinated attack and all the media published this story to make the market slump!

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Now is a great time to buy more and hold 1 year. Thank me later.

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That sounds like a pretty good plan to me.

Thank you for this bitcoin information give me. Thank you for this post sharingU5drx_NFe_Q4_Nn_YGEb9rq2_V47_X6_Yk_AQsm.gif

Gosh this post is so very interesting in trying to understand the market.

Very good point of view. The fact is that the fundamentals are the same. So let's keep calm. Thanks

Drop due to the fact that BTC is still in correction. Or at least that's what EW analyst tradedevil is claiming. Have a look at his recent macro BTC analysis.

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FYI, new TA summary posted. Cheers

great analysis about this information sir.
Thanks for sharing.

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Great analysis
About this information
Sir. Thanks for sharing.

                 - emonrahman


I'm a bot. I detect haiku.

It seems to me that the drop has stopped in 7500$ before... It was like that there were no money for market manipulators to take out more... but then....this why they left last hit, the hacker attack.

I think bitcoin is undergoing some evolution. It was over hyped last year.
It will definitely increase again but it might take long.
The fact is so many saw crypto investment as a get rich scheme only to face the reality this year 2018.

For every one keep calm, bitcoin will increase sooner.

All i have to say is.
BUY THE DIP

I agree, it could have gone either way and I think a lot of institutional buyers and futures traders have vested interest in buying at the lowest possible price for as long as they can. I do not think fraud or hacks of small exchanges are really that significant, it just gives those who have the money and global connections to pull prices down ( to increase their stake and cover their short positions) when it shows any sign of strength. I don't think this kind of hysteria will keep working for long, There is support and when it does recover I think it will be a series of sprints, there's not enough holders for it to skyrocket. But I think that we may have a really decent climb coming.

Thanks for the article. The market looks uncertain these days, quite bloody yesterday.

Bitcoins can be used to buy merchandise anonymously. In addition, international payments are easy and cheap because bitcoins are not tied to any country or subject to regulation. Small businesses may like them because there are no credit card fees. Some people just buy bitcoins as an investment, hoping that they’ll go up in value.

Just news to bring down the market so that big players can buy before jumping up. It has been a familiar act in this game, since the market is quite small at the moment, compared to other financial markets.

Great piece of work @jrcornel

Coinrail hack was merely the straw that broke the camel's back, so to speak.

That seem to be the case. I stopped believing that we can become bullish this year already. Perhaps 2019. But now camel back is really heavily broken and it may take at least a year to build back investors confidence.

Yours
Piotr