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What are your thoughts on the recent spate of exchange hacks? How will this affect the cryptocurrency market, given that Bithumb intends to reimburse its customers? Let us know in the comments below.

Popular South Korean cryptocurrency exchange Bithumb has suspended all deposits and withdrawals following a hack resulting in the theft of more than $31 million worth of cryptocurrencies. This marks the second Korean exchange hack in as many weeks.

Seoul-based cryptocurrency exchange Bithumb – currently the sixth largest exchange in the world by trade volume – announced shortly before 9 AM local time Wednesday that more than 35 billion won ($31.5 billion) worth of cryptocurrencies had been stolen from the platform in an apparent hack. Deposits and withdrawals on the exchange have been halted while they change out their wallet system to address safety and security issues.

Although it is not yet known which cryptocurrencies were stolen, Bithumb was quick to assure customers that their funds have been moved to secure cold wallets and that any losses resulting from the theft would be reimbursed from the exchange’s own reserves.

The Cryptocurrency Market Reacts

The cryptocurrency market reacted swiftly to news of the Bithumb hack, with Bitcoin prices and total market cap both down by more than two percent within a half hour of the announcement.

Key PointsBitcoin cash price failed to move above the $900 resistance zone and declined against the US Dollar. There is a short-term connecting bullish trend line formed with support at $865 on the hourly chart of the BCH/USD pair (data feed from Kraken). The pair must stay above $860 and the 100 hourly simple moving average to avoid more losses.

Bitcoin cash price failed to surpass a major hurdle near $900 against the US Dollar. BCH/USD declined and is currently testing the 100 hourly SMA.

Bitcoin Cash Price Resistance

Yesterday, we saw a decent upside move in bitcoin cash price above the $880 level against the US Dollar. The price traded towards the $900-910 resistance zone where sellers appeared. It failed to move above $910 and started a downside move. There was a major bearish reaction and the price declined below the $880 level. Moreover, there was also a break below the 50% Fib retracement level of the last wave from the $826 low to $927 high.

At the moment, the price is approaching a key support area above $860. There is also a short-term connecting bullish trend line formed with support at $865 on the hourly chart of the BCH/USD pair. The same trend line is positioned around the 61.8% Fib retracement level of the last wave from the $826 low to $927 high. Moreover, the 100 hourly simple moving average is positioned around the $860 level. Therefore, the $860-865 support zone holds a lot of importance.

Looking at the chart, the pair must stay above $860 and the 100 hourly simple moving average. If not, there are chances of more declines below the $850 level in the near term. On the upside, resistances are seen near $880 and $900 levels.

Looking at the technical indicators:

Tron recently made an upside break from the 0.04500 level, which was the neckline of a complex inverse head and shoulders pattern. This signals that an uptrend is underway, although price might need to complete this retest in order to gather bullish momentum.

Applying the Fibonacci retracement tool shows that the 61.8% level coincides with this area of interest or resistance-turned-support zone. It is also near the dynamic inflection points at the moving averages.

The 100 SMA is starting to cross above the longer-term 200 SMA to signal that the path of least resistance is to the upside. This suggests that the rally is more likely to resume than to reverse.

However, RSI is on the move down to signal that selling pressure is in play. This oscillator has some room to head lower before reaching oversold territory so bears could stay in control for a bit longer.

Stochastic is also heading south so Tron might follow suit but is already dipping close to the oversold region to signal exhaustion. If buyers return, a move back up to the swing high or higher could take place. Note that the reversal pattern spans 0.03800 to 0.04500 so the resulting rally could be of the same height.

Bitcoin has been trading inside a descending channel for quite some time and is currently testing the resistance at $6,800. If this continues to hold, price could fall back to the channel bottom or the Fibonacci extension levels marked on the chart.

The 38.2% extension is close to the mid-channel area of interest and could still spur a bounce. The 50% level is closer to the $6,000 major psychological support and the 78.6% Fib is near the bottom of the channel at $5,600. Stronger selling pressure could take it down to the full extension at $5,268.40.

The 100 SMA is below the longer-term 200 SMA to signal that the path of least resistance is to the downside. This suggests that the selloff is more likely to resume than to reverse. The 100 SMA is close to the channel top as well, adding an extra layer of resistance on another bounce higher.

RSI is turning down from overbought levels to reflect a pickup in selling pressure. Stochastic also seems to be moving back down without hitting overbought territory to signal that sellers are eager to return. A move past the channel top, on the other hand, could lead to a test of the 200 SMA dynamic inflection point.

Bitcoin recently drew support from news that the New York FSA gave a license to Square’s Cash mobile app, which would allow its clients in the state to trade bitcoin from their smartphones. This would bring more liquidity and volumes, apart from representing a positive update in the industry in a long time.

The RuiAn Police Department in China recently dismantled a gang of hackers who were installing malware on the victims’ computers, using their resources to mine Siacoin (SC).

The information was covered by the Hz News newspaper, which mentioned some important numbers to understand the magnitude of this criminal operation.

Siacoin: The cryptocurrency mined by the Cyber-criminals

According to the original news, RuiAn police were able to identify 16 members of this operation. They have already infected thousands of computers in more than 30 cities across the country, making an estimated profit of at least RMB 5.1 million, which would be equivalent to almost 1 million Dollars in a matter of months.

Mr Liu, a cybercafé owner who spoke to Hz News, said concerns arose when they noticed a significant drop in computer performance and an increase in electricity bills.

Seeing that the problem was common among other similar stores, the concerns turned into suspicion, prompting several business owners to file a collective complaint with the police:

Vietnam legislators approved a cybersecurity bill on June 12 putting tighter rules on tech companies from the start of 2019. Vietnam has been recognised as a potential hub for blockchain activity but doubts still remain over regulatory uncertainty.

New Cybersecurity Bill Approved

The new bill requires tech companies to hold important personal data locally which means they will need to have a physical presence in the country. It also makes sweeping bans over using the internet in ways that may undermine the state or spread incorrect information.

Lieutenant-general Hoang Phuoc Thuan, director of the ministry’s Cybersecurity Department, had spoken to major tech companies including Facebook in the run-up to the bill being passed.

He told VnExpress:

“They said that this [law] was appropriate and that they will research to modify their companies’ strategies accordingly,” and added, “Providing customers’ data to security authorities is not a violation of privacy.”

The Financial Times has reported that profits for cryptocurrency hedge funds have taken a sharp decline, in direct correlation with the negative price action seen with the overall cryptocurrency market.

Cryptocurrency Hedge Funds Down 35% In 2018

Hedge Fund Research, a reputable hedge fund analysis firm, has found that cryptocurrency hedge fund performance is down 35 percent in the first half of 2018 alone according to the FT. Despite posting an average gain of 45 percent in April, these hedge funds still declined in value over the other four months included in the HFR report. HFR’s research specifically targeted hedge funds that allocated a majority of its assets towards investing in cryptocurrency and blockchain projects alike.

However, it has become clear that these hedge funds took some action to mitigate risk, with the whole cryptocurrency market dropping by over 70%, but hedge funds only losing 35% on average since the start of the year.

This may have been due to the fact that these hedge funds invest into other classes of assets, which are still linked to the cryptocurrency industry. Some of these investments might have included startups, ICOs, and long-established cryptocurrencies firms that still produce profits in a market downtrend.

Despite 2018’s losses, the hedge funds analyzed were still profitable while looking at longer timeframes, with these funds increasing in value by over 2700% in 2017 alone. This staggering gain has been directly tied to the collective market cap of all cryptocurrencies, which rose by over 3000% in the span of 12 months.

Will the BitLicense approval lead to higher downloads of Square’s Cash app? Let us know in the comment section below. 

Square, a payment processing company owned by Twitter CEO Jack Dorsey, has obtained a New York BitLicense. The firm announced the news on Twitter on June 18, 2018. The license grants approval for the company to offer Bitcoin trading services in New York via its Cash app.

‘The Missing Piece of the Puzzle’

BitLicense is the colloquial term given to the business license issued by the New York State Department of Financial Services (NYDFS) to virtual currency firms. Introduced in August 2015, it is regarded as one of the hardest state virtual currency licenses to obtain. Square is only the seventh company to receive the approval.

Commenting on the development, Dan Dolev of Nomura Instinet said:

That was one of the missing pieces in their [Square’s] puzzle. They had approval in most states, but New York was by far the biggest one where you couldn’t trade bitcoin.

Central banks have no love lost for Bitcoin and cryptocurrencies. Even though some positive things are happening, the overall sentiment remains predictably rather negative. The validity of cryptocurrencies and their decentralized technologies are still in question, especially by banks. It isn’t the first time central banks feel the need for Bitcoin to have a central body giving the currency any real value.

Determining the Value of Bitcoin

A lot of people and institutions struggle with determining the value of Bitcoin. A decentralized form of money which isn’t centrally issued or controlled poses many different challenges. Moreover, it also raises the question as to whether or not this form of money can ever have any tangible value. Although Bitcoin has a market price, it tends to fluctuate quite regularly.

For central banks, this is a clear indicator Bitcoin is too volatile. There have certainly been many ups and downs along the way over the past nine years. Every year, it seems there is a bearish trend prior to the Bitcoin price spiking upward again. Throughout 2018, that bearish trend has become very apparent, reducing the value of one Bitcoin by nearly two-thirds in the process.

Compared to gold, Bitcoin is a lot more volatile. At the same time, it is evident gold has also lost some appeal when it comes to investing, even though it is still a decent store of value. Some people have also attributed that label to Bitcoin, even though it is clearly too volatile to carry that burden. That said, the value of Bitcoin has held its own quite well compared to a year ago, as it is still quite a bit higher compared to June 19th of 2017. At that time, one BTC had a value of around $2,500.

The “Need” for a Central Body

One of the discussions that comes to the surface quite often is the lack of centralization in Bitcoin. More specifically, there is no central developer, company, bank, or government, responsible for maintaining the world’s leading digital currency. It is a very different take on the entire concept of money, and one central banks still struggle with today. Finance is, for banks, all about trust – we have no choice but to trust them with our money. Bitcoin, on the other hand, is completely trustless, and therein lies the threat to banks which profit on the finances of others.

Do you think there is merit behind ATO’s move to regard cryptocurrency as an asset? Don’t hesitate to let us know in the comments below!

After moving to request all cryptocurrency exchanges to report to the country’s watchdog agency, the Australia Taxation Office (ATO) will be collecting Capital Gains Tax (CGT) on cryptocurrency gains, essentially classifying them as assets.

Cryptocurrency = Asset

Liz Russel, a senior tax agent at a private Australia online tax return service, shared some insights on the way theATO will be treating cryptocurrency gains and what people should expect. Just like in the majority of countries, there is an ongoing debate amid Australian institutions regarding the proper classification of cryptocurrencies.

However, according to the senior tax agent, the ATO has made it pretty clear that it would regard them as assets:

There is a long-running debate over what cryptocurrency actually is – whether it’s an asset, currency or collectible – but the ATO has made it clear that it treats cryptocurrency as an asset. […] That means it’s subject to the same capital gains tax (CGT) provisions that apply to real estate and shares.