Once again, a hack in a distant land has led to mass panic among crypto investors. Within 24 hours of the announcement that South Korean exchange Bithumb had been hacked for $32 million, the combined cryptocurrency market cap value has fallen by $17 billion. At the same time, Ethereum continued its woeful streak, dropping by 7%.
It’s tough to live in the crypto world right now. Whether one is involved in the business to some degree or is a crypto ¡user or investor, it seems like every day there is news of another hack, the impending threat of strict regulations, or a dramatic price fall.
As a collective, we get to enjoy the smallest of feel-good stories for a few hours – whether it be Ethereum Classic’s recent winning streak or Jack Dorsey saying Bitcoin is the future and then BAM! Another negative headline hits us – this time it’s the crypto market dropping by $17 billion in value in 24 hours.
EOS, Ether, BCH, Litecoin, Stellar and Cardano all were hit with value drops, with EOS continuing its rocky start to life as fully-fledged crypto by suffering a 7% drop in value.
What Caused This $17 Billion Slide?
First off, it must be said, the effect of Facebook, Google, and Twitter’s crypto advertising ban is ongoing, and has cost the industry hundreds of billions in value. Corporate investment – so long looked upon as essential for the growth of the crypto industry – is unlikely to begin until either Facebook or Google end their discriminatory ban.
However, there does seem to be an undoubted correlation between a headline-making crypto exchange hack, and a subsequent, high-profile crypto market cap dip. It happened earlier this month, when a hack-related theft of 30% of small South Korean exchange Coinrail’s supposedly secured cryptocurrency sent the combined market into a downward spiral. When the dust had cleared, Bitcoin’s value had fallen by 10%, and the combined crypto market fell below the $300 billion mark, by far its lowest price in many months.
Likewise, today’s market drop is almost definitely the result of panic stricken investors selling off large amounts of crypto in the wake of Wednesday’s $32 million Bithumb hack, although there is some irony in that the amount that was actually stolen by criminals is a tiny fraction of the vast sum sold off in what is basically blind panic.
Crypto Investors Need To “Get Real”
If people want to be part of this exciting new financial frontier that is cryptocurrency, and they are willing to invest some of their assets into Bitcoin, Ethereum, Litecoin or whichever, they need to “get real.” Thefts happen, but as long as you are compensated, what’s the problem?
If news broke of a major bank robbery in South Korea or Japan, would the streets be full of people running down to their local banks and withdrawing all of their savings?
Banks vary in the amount of money they have in their vaults, the neighborhoods they are in, the level of security they have, etc. Crypto exchanges also vary; not all of them have the same level of security, and not all of them hold the same cryptocurrencies.
Another thing that banks and crypto exchanges have in common is compensation. If a person has money taken from their bank account illegally, they can expect to be fully compensated for it. Likewise, any crypto owner who loses their assets in a hack will be compensated in full, just as the victims of the thefts in South Korea at Coinrail and Bithumb will be.
So come on people, get real, and stop all of this crypto-panic!