Standard Kepler

Exchange Hacks and Regulations Push Bitcoin to 2018 Low

Exchange Hacks and Regulations Push Bitcoin to 2018 Low
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06/18 – 06/24

WEEKLY RECAP

  • Total market cap. reached $246.21 bn (a 12.5% decrease), where 7 day trading volume rebounded by 2.9% for top 100 crypto


WEEK AHEAD

  • 26 June: ZEC Overwinter hard fork
  • 29 June: The last trade date of CME Bitcoins Futures for BTC


THOUGHTS OF THE WEEK

The cryptocurrency market continued its bearish momentum this week. As noted in our Chart of the Week, the price of Bitcoin (BTC) dropped by 8.88% this week and reached a new 2018 low of $5,826, a 67.1% pricing drop from its 2018 high of $17,712 in January.

We believe this week’s plunge in the price of BTC to partly be a result of tightened regulations on six major Japanese cryptocurrency exchanges by the Financial Services Agency (FSA) in Japan, with the FSA issuing business improvement orders for the six exchanges regarding anti money laundering (AML) and know-your-customer (KYC) requirements. As a result, with 66.6% of Bitcoin’s trading volume being traded against JPY, the price of Bitcoin suffered a 8.88% drop.

We also notice that  the $30mn hack of Bithumb on 20 June can shed some further light on the plunging price of BTC. We expect that the Korean government will expedite the enforcement of stricter regulations on crypto exchanges following the hack of Bithumb and the hack of Coinrail earlier in June. It is also worth noting that EOS and ADA, being primarily traded against KRW, suffered the most severe % price drop (28.3% and 20.6%) following this Bithumb incident.

Despite the downward momentum of BTC’s price this year, we can speculate that the issuance of 250mn USDT tokens on 25 June may indicate an inflow of capital into cryptocurrency markets, and a possible short-term rebound for BTC’s price. This is referenced by the slight rebound in BTC’s price following USDT’s release of 300mn tokens into circulation in late March.

 

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