Bitcoin Tanks After a Major Japanese Exchange Loses Crypto Worth $32 Million

Source: Forex News

This year, Bitcoin and other
cryptocurrencies have been the best-performing assets in the financial markets.
Year-to-date, Bitcoin price has risen by 195% while that of Ethereum has risen
by more than 90%. There are technical and fundamental reasons for this
increase.

From a technical perspective,
many investors bought into the currencies in January, after dropping sharply in
the previous one year. This is through a strategy that is known as statistical
arbitrage. Over the years, many investors have used this as an investment
strategy and has worked relatively well.

From a fundamental perspective,
there are a number of reasons why many investors have bought into the
cryptocurrencies. First, Bitcoin halving is expected to happen in 2020. Halving
is a process in which the block reward is cut into half. This usually leads to
more supply constraints and is usually a bullish thing. Second, there has been
interest in the industry.

Early this year, JP Morgan
announced that it was creating a JPM Coin, which it will use for international
funds transfers. This was viewed as a major news because of the size of JP
Morgan, which is among the biggest banks in the world. This was followed by the
recent announcement by Facebook that it was planning to launch Libra. Libra
will be a cryptocurrency that will be backed by major assets like the USD and
EUR. It will be used to make all types of offline and online transactions.

While the reaction to the news
was positive, the momentum appears to have waned. This is because of a number
of reasons. First, investors agree that the path to having Libra as a currency
is still difficult. In his testimony this week, Jerome Powell said the following
about the currency.

While the project’s sponsors
hold out the possibility of public benefits, including improved financial
access for consumers, Libra raises many serious concerns regarding privacy,
money laundering, consumer protection and financial stability. These are
concerns that should be thoroughly and publicly addressed before proceeding.

Many other regulators and
politicians have expressed their concerns about the currency.

In addition to this, the security
concerns about cryptocurrencies are still there. Yesterday, it was announced
that cryptocurrency worth more than $32 million had been stolen from a Japanese
exchange known as Bitpoint. Bitpoint is owned by a company known as Remixpoint,
whose shares dropped by 20% after the announcement. The funds were stolen from
a hot wallet that had five cryptocurrencies including Bitcoin and Bitcoin Cash.

The BTC/USD pair declined to a
low of 11,000, which is lower than the 25-day and 14-day moving averages. The
RSI is trading along the level of 40. There is a likelihood that the pair will
continue moving lower to the important support of 10,000.

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