The price of Bitcoin (BTC) increased sharply over the weekend and hit a high of $12,000 on Sunday. The jump from Friday’s low of $10,400 was short-lived however as the market was suddenly hit by the Coincheck hack resulting in the theft of $530 million worth of NEM coins (NEM). Bitcoin price has been volatile since the start of this year but the latest hack may have damaged faith in the cryptocurrency even further.
Although the Coincheck management ensures a refund of almost $425 million, Japan’s Financial Services Agency has raised questions over whether Coincheck actually has enough funds for the compensation.
The hack has not only exposed the security of the entire cryptocurrency markets, it has also raised concerns about regulatory requirements.
Japan’s Financial Services Agency announced on Monday that they will check the security measures of each cryptocurrency exchange. The agency has also ordered Coincheck to improve security measures.
Coincheck said, “The NEM coins were stored in a “hot wallet” instead of the more secure “cold wallet,” outside of the internet.”
The broader sell-off was observed throughout Monday trade, thanks to additional concerns related to Tether. Cryptocurrencies started struggling after Coindesk reported that Tether had parted ways with its auditors. As a result, trader concerns have now been raised over whether Tether has artificially raised their value, which they said had been backed by the dollars.
Nicholas Weaver – a professor at UC Berkeley’s International Computer Science Institute, said that a “true bloodbath” is likely if Tether couldn’t prove their value in actual dollars. He said: “At current prices, net new Bitcoin requires $18million of net new dollars flowing in to maintain the price… Yet there is a net $100million a day of fake dollars in the form of Tethers.”
Bitcoin is trading at around $11,378 at the time of writing, down 4% from the previous day.
On Monday trade, Ethereum (ETC), Bitcoin Cash (BCH), and several other digital currencies will be struggling to trade in the green. Analysts expect the Bitcoin price to plunge 80% amid Tether concerns, regulatory concerns from South Africa and the Philippines, and from other major countries likely to cap the upside potential of digital currencies.
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