FxPro: Crypto slides from holiday hopes to cold reality

Cryptocurrencies are experiencing post-holiday correction after a sudden increase. Investors who expected a festive rally are now closing their positions, which is intensifying the wave of decline. Over the past day Bitcoin has lost about 5% and is trading below $3,700. All major altcoins are also in the red zone, losing from 6% to 13%.

One of the reasons for the decline could be theft of 40,000 Ethereum Classic coins (about $200,000) from the Gate.io exchange. The hacker made this using “51% attack”: the object received an overwhelming amount of network hashing power, which allowed him to rewrite the transaction history and make double spending.

Also a serious negative impact was the news about the Japanese regulator FSA rejection of the crypto ETF. In addition, shortly before the start of the correction, it became known that a 40000 ETH was transferred to the exchange with a probable sale target, which could cause a painful chain reaction. However, this is nothing more than news stories that are unlikely to have long-term consequences.

However, we can say that the main reason of current decline is still speculative dynamics. Although cryptocurrency skeptics do not get tired to say that this is the “real death” of Bitcoin and the beginning of the end for the entire crypto market as a whole, it became known that the average daily number of transactions on the Bitcoin network over the past week approached an annual maximum of over 280,000. It is unimportant what kind of transactions it is: cryptocurrency demand does not fade away, and even vice versa.

Among the important upcoming events worth highlighting hardfork in the Ethereum network called Constantinople. Experts express the hope that ETH will increase in price after the update. In the long term, ETH is also considered as a very reliable bet in the crypto sector, since many popular projects will be created on its basis that can improve the image of the industry and breathe new life into the blockchain in general.

Александр Купцикевич, аналитик FxPro