Yesterday, on June 20, more than $10 billion was erased from the cryptocurrency market after Bithumb, South Korea’s biggest cryptocurrency exchange was hacked. Today, the cryptocurrency market added $8 billion to its valuation following Bitcoin’s slight gain, recovering from the Bithumb hack within 24 hours.
What’s Behind the Recovery?
On June 20, major cryptocurrencies including Bitcoin, Ethereum, Ripple, and Bitcoin Cash fell by around 2 percent as the market fell slightly, led by the intensified downward movement of tokens and smaller cryptocurrencies.
The minor correction was evidently triggered by the Bithumb hack, which immediately stopped the corrective rally of the cryptocurrency market and the short-term rally of Bitcoin from $6,300 to $6,700. Investors in both the global cryptocurrency market and the exchange market of South Korea initiated a sell-off of digital assets out of fear that the Bithumb hack may trigger a short-term downtrend.
However, the Bithumb team immediately came out with an official statement, which read:
We checked that some of the cryptocurrencies valued about $30,000,000 were stolen. Those stolen cryptocurrencies will be covered from Bithumb and all of the assets are being transferred to a cold wallet.
Having made more than $300 million in net profit in 2017, $30 million is not a large sum of money for the company valued at over a billion dollars. But, after the release of its statement, Bithumb retracted it from various social media platforms.
When asked, a Bithumb representative said that while the amount stolen in the hacking attack remains correct and it is also concluded that the company will cover all $30 million with its funds, the company was asked by regulators to take a more organized way of dealing with the incident and thus, retracted its statement to release a full announcement in the near future.
Yesterday, many analysts were highly optimistic in regard to the short-term trend of the cryptocurrency market, primarily due to the positive movement of BTC and ETH. BTC also avoided a dip below the $6,000 mark after it bounced relatively quickly from the $6,200 mark.
Several momentum indicators including the moving average convergence divergence (MACD) and Relative Strength Index (RSI), along with both simple and exponential moving averages demonstrated short-term optimism and momentum for BTC.
Where BTC Can go Next
Still, due to the low volume of the entire cryptocurrency market, it is difficult to conclude that bears have lost control over the market. But, over the past 9 days, BTC has been able to secure some momentum with consecutive daily buy candles.
Throughout May 29 to June 8 and from May 17 to May 21, BTC had demonstrated short-term optimism. However, large sell-offs triggered by the lack of volume led BTC to continuously drop from the $8,000 mark.
It is still possible for BTC to drop below the $6,000 mark if a large sell-off is recorded in the upcoming days, below the $6,800 region. If BTC rebounds to $7,000 and breaks a key resistance level at that region, it is possible for BTC to initiate a mid-term rally. Currently, investors need to observe the market and the volume to see the next movement of the market.