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What Caused Crypto Markets to Dump $30 Billion and Hit a New 2018 Low

This year has not been a bright one for cryptocurrencies. The fervor at the beginning of 2018 has dissipated into a shroud of despair towards the end of it. As markets continue dump, new lows are being made leaving us wondering when it will reach the bottom.

Over the past 24 hours cryptocurrency markets have bled $30 billion dollars according to stats from Coinmarketcap.com. From a level of $219 billion this time yesterday markets have crashed to a new low for the year of $189 billion around eight hours ago. A small correction has pulled them back to $192 billion but further losses look imminent.

It is the third lower low in August indicating that the down trend is steepening. A whopping $110 billion has left the crypto space in less than three weeks as markets plunged 37%. Bitcoin has fallen sharply dropping 27% from its July high of $8,350 to its current level at just over $6,000. This has caused the altcoins to shed even more as they get dumped in a fury of FUD. Many of them including Cardano, Iota, Tron, Neo, Binance Coin, VeChain, and 0x are getting smashed over 20% on the day.

There has been some speculation as to what is behind this big dump as the SEC’s delay of the CBOE ETF would not have caused such a collapse but may have been the catalyst for it.

Senior market analyst at eToro, Matti Greenspan, suggested the US dollar is having an influence when he told the WSJ;

“The crypto markets falling may well be a side effect of the dollar strength right now. The buck is simply crushing everything in its path.”

Other analysts have blamed Ethereum for the last two day’s declines as ICO projects offload their ETH holdings to liquidate assets in a bearish market. Ethereum has been crushed overnight with an 18.5% slide to $260, its lowest level since September last year. Since early February over $80 billion has been dumped out of Ethereum’s market capitalization sending it back to levels in mid-2017.

Ethereum is still the primary platform for many ICO and blockchain projects but since raising funds in ETH they have been anxious to cash out as the bearish market goes from bad to worse. It appears that this has all happened at once accelerating the free fall that many tokens are now experiencing.

The long term prospects for Ethereum and Bitcoin are still very strong, but this year they are being put through the wringer.

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Cryptos Dump as Korean Exchange Coinrail Gets Hacked

A few hours ago crypto markets plunged losing over 14 billion dollars in just a few hours. At the same time news emerged that South Korean crypto exchange Coinrail had suffered an incursion resulting in the theft of various altcoins.

According to twitter posts from the company there had been a ‘cyber intrusion’ with Pundi X (NPXS) suffering losses;

Coinrail is not one of the major exchanges; in fact it is relatively obscure ranked way down at 90th in terms of trade volume according to coinmarketcap.com. The exchange handles just under $2.7 million in volume per day. The majority of that is used to trade an equally obscure coin called Pundi X. The mission of Pundi X claims to “make buying cryptocurrency as easy as buying bottled water. As the Walmart and 7-Eleven of cryptocurrency, we want users to buy and use cryptocurrency anytime anywhere.”

Coinrail followed up with a post stating (translation);

“At 15:00 investigation, the other exchange, coin developers are working hard to recover the total amount of the leaked coins such as Ferndix, Enfer, and Aston in cooperation with two-thirds of the amount collected or recovered, as well as the cooperation of the investigation and related institutions for the remaining coins.”

Their website was down at the time of writing with the following message (translation);

“We are currently in the process of checking the server to provide a stable service environment. The system is being checked for hacking attempts. Some coins (Fund X, NPXS) have been identified and are being checked for additional coin damage. Currently, coins are under negotiation to prevent damage, and some coins may not be able to transmit to the network.”

It is unlikely that the hacking of an insignificant exchange trading a minor altcoin would cause Bitcoin and all other cryptos to slash billions of dollars from their market caps. But that is pretty much what has just happened over the past few hours.

Bitcoin fell from $7,620 to $7,320 in a quick dump that lasted 90 minutes. Ethereum did likewise shedding 5% in a similar timeframe. Markets have not moved much since the beginning of June but this latest fall has sent them back to a ten day low last seen at the end of May. At the time of writing crypto markets are worth $324 billion, down over 30% from May’s high of $470 billion.

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Crypto Crash on the Chicago Exchange

The wait was finally over for institutional traders wanting to get some crypto action with the Chicago Board Options Exchange futures contracts launched yesterday. However their enthusiasm was a little too much for the CBOE website which became unavailable just as it launched the first contracts at 18.00 EST on Sunday.

In a status update Tweet (https://twitter.com/CBOE/status/940001581482815498) the exchange stated “Due to heavy traffic on our website, visitors to cboe.com may find that it is performing slower than usual and may at times be temporarily unavailable. All trading systems are operating normally.”

This coincided with another price jump in Bitcoin when it went from around $14,500 at 23:00 UTC to $15,700 six minutes later according to CoinDesk’s Bitcoin Price Index (BPI). The initial surge soon abated and the exchange website was back online again. Information on the futures contracts has been posted here.

Users took to social media to express their frustration. One posted: ”Quite a pathetic launch of future on CBOE, it seems that the website crashed.” While another added: “CBOE site down eight minutes after Bitcoin launch.”

Initial data indicates that investors are moving into Bitcoin contracts with the first, which expires in January, having the most uptake. According to CNBC reports, 672 January contracts were sold by 19:10 EST, just over an hour after launch.  CBOE is the first major regulated US exchange to offer contracts in crypto currency, it will be a litmus test for sentiment in general. The larger CME Group will also be launching its own Bitcoin contracts on Sunday 18th.

CBOE executives are hopeful that the futures launch will lead to other products and services centered on crypto currencies. This could include a possible shift into exchange-traded funds and notes however they would all need SEC approval.

Crypto critics have been warning about the volatility of trading unregulated digital assets and the security issues surrounding them. An economist at Deutsche Bank has recently warned that a crash in the price of Bitcoin could destabilize the global markets. While others have argued that the risk to the global markets from a crypto crash is relatively small. BTC market capitalization is currently around $275 billion, which is much smaller than the value of gold outstanding. A number of reports of hacking and Bitcoin theft recently have shed light on how much more vulnerable digital currencies are compared to traditional money.

Investors and traders seem to be ignoring the naysayers as BTC seems to have already recovered from its little correction over the weekend and it marching back upwards towards $17,000.