The Current State of Crypto is a weekly examination of events and market movements in the cryptocurrency economy.
Green week breaks long-term downtrend
Perhaps in anticipation of futures contracts expiring on the CME, Bitcoin climbed persistently this past week, playing a tug of war at levels nearing $4200 USD, and eventually pulling back to sit at its current price around $4100. The gentle pullback could indicate a significant level of support at the new threshold. A few attempts by bears to send prices spiralling downward were quickly thwarted by bullish buyers. Judging by previous weeks’ patterns, however, a drop back to $3800-3900 on Monday or Tuesday would not at all be surprising.
With this push, a number of altcoins rose as the Bitcoin tide carried the market upwards. Basic Attention Token, Tezos, Waltonchain, EOS, and Ravencoin stood out as altcoin market leaders over the past week. On the other hand, a few major cryptos including Crypto.com, DigiByte, REPO, and Enjin Coin lost momentum and reversed trend, falling by greater than 10% in market value.
Bithumb hack inside job
Bithumb appears to have suffered from a hack that saw 3 million EOS — at a value of $13 million USD — leave its wallets yesterday. Based on research since the attack, it has been suggested that the theft was an inside job, perhaps performed by employees of the exchange. Whereas most exchanges protect assets with multi-sig security, it appears that Bithumb did not follow this procedure, leaving the assets more vulnerable to theft from insiders.
Bithumb had recently announced layoffs to around half of its workforce — potentially a motivation for this activity. Bithumb has stated that client assets are safe, as the stolen assets were company-owned.
IEOs: the new boon to exchanges
The IEO, or Initial Exchange Offering, is gaining steam as the preferred tool for launching a new token to the public. The new method of introduction cuts down on some of the more persistent problems of ICOs by reducing vulnerability to scams and theft, but is not without problems of its own.
Binance has already enjoyed a few tremendously popular IEO offerings, including BitTorrent and the most recent Celer, which saw prices plummet to the floor soon after launching. The exchange was inundated with traders attempting to buy up swaths of new tokens, leading to extreme network traffic issues that caused many failures to purchase desired tokens. To reduce the problem, Binance introduced a lottery system that unlocks IEO purchasing for large holders of the BNB token. This, of course, resulted in a massive run for BNB and a large number of disappointed casual traders.
Kucoin followed suit launching Spotlight, a service that requires Kucoin Shares (KCS) for the purchase of IEO tokens. MultiVAC will be the next IEO to launch on Kucoin on April 3, following a “strict screening process” (source). Thus, KCS has also shot vertically in value over the past couple weeks. Such a large-scale exchange of KCS for new tokens may cause a significant dip in KCS value during and following the launch.
Not to miss out on the IEO party, Bittrex announced the IEO launch of VeriBlock on its exchange platform:
The sale is expected to amount to 70 million VBK at a rate of 0.10 dollars per VBK. IEO totals 7 million dollars on Bittrex. During the IEO at least $ 20,0000 for Bittrex International participants is available to purchase.(source)
It will be interesting to see how this process works out for Bittrex users, considering the heavy traffic demands of IEOs recently witnessed on competing platforms.
New measures for trading volume
Following disappointing, but not surprising news regarding fake volumes on crypto market reporting websites such as CoinMarketCap, a number of new services have leapt upon the opportunity to serve users with greater accuracy in trading volume. OpenMarketCap and Messari’s OnChainFx are two services that have instead chosen to report volume from the top ten exchanges that have been found to be reporting accurate trading volumes. Of course, this negates any volume on exchanges outside of the top ten, so may instead be under-reporting trade volumes. Still, it gives a far more realistic picture of volumes that line up with market caps more logically.
It should be noted that all of these observations are just that — observations I have made about the market over the past week. This is not professional financial advice and is intended only to act as a quick examination of some of the week’s events for you to enjoy. Please do your own research before doing any investing and never risk more than you can afford to lose.