Crypto Market Hit By Another Hack
For cryptocurrency investors, this past weekend was a tough one. On Sunday the price of Bitcoin fell below $7,000 — which had served as a floor for the coin in recent month — and is currently sitting at around $6,750. Not only was that coin down more than 10% since the Friday before but numerous other coins fell in unison. The culprit this time around? Likely the hack of South Korean cryptocurrency exchange Coinrail.
Coinrail, which according to MarketWatch is the 99th largest crypto exchange with a daily trade volume of $2.66 million, announced on Sunday that it had been hacked. As a result of the breach, nearly $40 million in alt-coins were stolen. A note posted on the site following the incident offered more details, stating, “On June 10, there was a system check due to the hacking attempt at dawn. At present, 70% of your coin rail total coin/token reserves have been confirmed to be safely stored and moved to a cold wallet and are in storage.”
Looking at the Coinrail situation, some may be wondering why the hack of a relatively small exchange is being blamed for a such a sizable drop in price. The answer is that the incident coincides with a series of other security problems that cryptocurrencies have faced. This includes the January hack of another Asian exchange Coincheck, which saw $530 million stolen. Beyond cryptocurrency exchanges, the recent “51% attack” on Bitcoin Gold and some smaller tokens has also raised concern. Given the oft-cited selling point of cryptocurrency being the security they offer, these events have had a larger monetary impact than their on-paper values would suggest.
Speaking to CNN Money, Adrian Lai of Orichal Partners noted that, for those brave investors who have turned to cryptocurrencies as a way to grow their wealth, fear may be really starting to set in. As he put it, “Investors have been increasingly worried about cybersecurity issues. At this stage, obviously, the standard is not high enough.” He went on to say that these incidents have further sullied the cryptocurrency market. In turn, in the eyes of some efforts by various governments and authorities appear more justified.
As we’ve hit on before, one of the problems that has emerged with cryptocurrency is that, while some investors see Bitcoin as a “get rich quick” opportunity, the road is proving much more difficult this year than last. With each new security breach and ensuing drop in coin value, there are likely a few investors who decide enough is enough. However, in the grand scheme of things, these incidents — while temporarily painful — will hopefully make cryptocurrency and blockchain technology even stronger in the long run (as the cliche goes). Until that time, those who choose to stay the course with crypto should prepare for more bumps ahead.