The 2018 selloff in cryptocurrencies deepened, wiping out $42 billion of market value over the weekend and extending this year’s slump in Bitcoin to more than 50%.
Some observers pinned the latest retreat on an exchange hack in South Korea, while others pointed to lingering concerns over a clampdown on trading platforms in China. Cryptocurrency venues have come under growing scrutiny around the world in recent months amid a range of issues including thefts, market manipulation and money laundering, Bloomberg reported.
Bitcoin has dropped 12% since 5pm New York time on Friday and was trading at $6,765.54 as of 2:49pm in Hong Kong on Monday, bringing its year-to-date loss to 53%. Most other major virtual currencies also retreated, sending the market value of digital assets tracked by Coinmarketcap.com to a nearly two-month low of $298 billion. At the height of the global crypto-mania in early January, they were worth about $830 billion.
Enthusiasm for virtual currencies has waned partly due to a string of cyber heists, including the nearly $500 million theft from Japanese exchange Coincheck Inc. in late January. While the latest hacking target—a South Korean venue called Coinrail—is much smaller, the news triggered knee-jerk selling, according to Stephen Innes, head of Asia Pacific trading at Oanda Corp. in Singapore.
“This is ‘If it can happen to A, it can happen to B and it can happen to C,’ then people panic because someone is selling,” Innes said. The slump may have been exacerbated by low market liquidity during the weekend, he added.
“The markets are so thinly traded, primarily by retail accounts, that these guys can get really scared out of positions,” he said. “It actually doesn’t take a lot of money to move the market significantly.”
Coinrail said in a statement on its website that some of the exchange’s digital currency appears to have been stolen by hackers, but it didn’t disclose how much. The venue added that 70% of the cryptocurrencies it holds are being kept safely in a cold wallet, which isn’t connected to the Internet and is less vulnerable to theft.
Two-thirds of the stolen assets—which the exchange identified as NPXS, NPER and ATX coins—have been frozen or collected, while the remaining one third is being examined by investigators, other exchanges and cryptocurrency development companies, it said.
Coinrail trades more than 50 cryptocurrencies and was among the world’s top 100 most active venues, with a 24-hour volume of about $2.65 million, according to data compiled by Coinmarketcap.com before news of the hack.
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