Another Crypto Sell-Off Hits After Ethereum Upgrade Delayed Again
After a disappointing 2018, cryptocurrency investors have high hopes for 2019. Unfortunately the new year has yet to bring much good news. Most recently, as Forbes reports, many assets including Bitcoin, Etherum, Litecoin, XRP, and others experienced another sell-off, with a total of $6 billion in market capitalization being lost in the past day or so.
While there was a period last year where it seemed that Bitcoin had found a floor at $6,000, today the leading cryptocurrency is hovering around $3,500. Forbes notes that $3,500 represents a psychological mark for investors, which could serve to complicate the current 5% dip. That said Bitcoin was trading as low as $3,285 just last month — well below the famed $19,000+ it saw a year prior.
Ironically, while much of the attention the crypto market gets relates to Bitcoin, it seems this latest sell-off may be attributed to the world’s second largest crypto asset by market cap, Ethereum. That’s because, this past week, Ether once again delayed a planned upgrade due to security concerns. The Constantinople hard fork is intended to help stabilize the currency, with one of the most notable changes coming to the rewards paid to miners. Instead of receiving the current three ETH reward per block, that fee will be reduced to two ETH once the upgrade is complete.
Originally the Constantinople upgrade was due in November but was delayed until January. However, on the eve of when the changes were set to begin, the fork was delayed due to the detection of a security flaw. Apparently a bug was found that would have allowed users to steal funds. Notably this comes on the heels of Ethereum Classic experiencing a so-called “51% attack” that resulted in more than a million dollars worth of ETC being doubly spent. The Constantinople hard fork is now planned to begin next month.
What’s interesting is that, at the height of cryptocurrencies back in 2017, it’s unlikely that this sort of news would have much of an impact. However, as eToro senior market analyst Mati Greenspan explains, “What we’re seeing now is the effect of a flat market—the overall sentiment noise is dying down so individual token developments are getting more attention.” To that point many assets had been rallying ahead of the upgrade, although Ethereum itself had seen the greatest movement.
The silver lining to this latest sell-off is that, had the Constantinople upgrade gone live with a security flaw that was later exploited, the fallout would undoubtedly be far worse. Still, as the crypto bear market roars on, investors are surely getting tired of receiving nothing but bad news. Hopefully next month will see the successful Ethereum upgrade and bring upon the rally the crypto market so desperately needs.