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Crypto week #2: Market analysis, ETC 51% attack, Bitcoin Transactions
WEEKLY
January 13  |  8 min read

Crypto Week #2 Overview

COIN360 Editorial Team

We’re coming to you from a Friday in the red this week, after the Thursday 10th slump that affected most of the market. A 51% attack on ETC, Reports on several crypto indicators, and expert’s opinions on the 2019 outlook punctuated the news cycle.

Here’s what you need to know about this past week:

1. Market Analysis

When last week ended, Bitcoin was still struggling to reach $4K for the first time since Christmas Eve. On Sunday 6th, traders finally celebrated when a vertiginous surge of 6.5% placed BTC at $4,093 in under 24 hours. The coin remained over $4K (brushing $4,000 and then growing over $100 on Tuesday 8th, reaching the week’s peak of $4,109), and on the 9th, sources were reporting that the bullish sentiment was at a 5-month high. The cheer lasted until the dive of Thursday 10th. As violent as the positive surge of four days prior, this slump saw BTC fall in a step-shaped pattern: a virtually vertical 5.3% loss was quickly followed by a second, 4.8% loss (for a total of 10.1% that places it back on the level of December 28th). This week’s low point was $3,656, and experts say this may put an end to the corrective rally we’ve seen since December 17th. BTC is expected to remain volatile within the $3K - $4K range for now. BTC is currently at $3,677, with a 0.58% loss on the day and a 4.36% loss on the week.

Ethereum experienced the heaviest loss this week among the major coins, and has also lost its second place to Ripple once more. ETH had been on a fairly positive and stable trend in the days prior to the Constantinople hard fork. The coin was shifting within the $158 and $149 range from the 7th until the 10th, when it fell 16.5% to $151 to $126, becoming the week’s worst performer, along with Bitcoin Cash and Litecoin; all coins that had seen the biggest gains in the past month. ETH is now at $125.93, signifying a 2.6% loss on the day and a 19% loss on the week.

Ripple is once more in second place by market cap. The altcoin peaked twice this week, at $0.37 on Monday 7th and $0.38 on Thursday 10th, bookending the stable days before the dive. XRP fell 15% on the 10th, a similar loss to ETH. XRP has remained around $0.33 today Friday 11th, currently at a 0.21% loss on the day and 6.85% on the week.

EOS followed the trend, moving between $2,75 and $2,98 from the 7th to the 10th. Immediately following the $2.98 peak, the altcoin plunged in a step pattern similar to Bitcoin; 12% down to $2.6 and then another 8% down to $2.39. EOS remained stable all day Friday 11th and is currently at $2.45 for a 1.43% gain on the day and an 11% loss on the week.

Finally, TRON. Justin Sun’s altcoin grew 34% this week and surpassed Bitcoin SV’s market cap, which places it back in 9th position among coins. This coin’s week did not begin with the stable plateau that the other coins in this list experienced. Tron started the week at $0.022 and climbing slowly and steadily to $0.034, the week’s peak on the 10th. It then took the plunge down to $0.024 (a 29% loss), but, contrary to the coins revised previously, saw a volatile recuperation, peaking again at $0.027, and falling back down to $0.023 on Friday 11th, for a 10% loss on the day and an 8.95% gain on the week.

2. ETC 51% attack double spending

ETC developers started Monday 7th countering that the claims of a mining pool over 50% of the network could be an attack, and denying other source’s detection of double spending on the 5th, saying it was “most likely selfish mining”. By Tuesday 8th, however, it was clear that a deep reorganization of the blockchain and a double spending that involved more than $1.1M in crypto had taken place, as confirmed by multiple reports.

According to research by the blockchain security firm Slowmist, the attack began on January 5th at 19:58:15 UTC. Several major crypto exchanges in the USA and Japan temporarily suspended their ETC activity. A debate about the efficiency and value of PoW consensus systems has been reignited in the cryptosphere.

3. Forks in Ethereum Pull Back Last Month’s Growth

Numerous coins saw double-digit percentage losses this week, and Ethereum’s value wasn’t up to par with last month’s grow after forks in Ethereum and Ethereum Classic left users susceptible to scammers. Ethereum Classic Vision and Ethereum Nowa claimed to be forking from ETC and ETH, respectively, but upon inspection, their code proved both sites were stealing private keys.

Ethereum’s upgrade, Constantinople, is set to launch in the next week. Offering users improvements to network efficiency and fees, the Ethereum Improvement Protocols will hopefully serve as added value while the block reward will be lowered from 3 ETH to 2 ETH.

4. Wallet holdings decrease

A report by The Block speculates that at least 10% of all Bitcoin in circulation must be held in exchange wallets, though the number is partly unconfirmed, since a few exchanges do not have publicly available wallets. According to the research, the average amount has decreased by nearly 6% since early October.

“This could indicate that there are either lower levels of speculation or that customers are withdrawing cryptocurrencies to their own wallets,” reads the study. “If the balances are decreasing, it could indicate that the exchange is losing business”. According to the same source, it is likely that a downtrend in balances related to a decrease in traded volume.

5. Bitcoin Transactions Hit High

Bitcoin transactions surpassed 218,000 this week, reaching a one-year high (the previous record hit in January 2018). Bitcoin transactions have been steadily increasing since April 2018, when downward transaction numbers slowed down. Although prices may seem to be heading downward, the growth in transaction figures illustrates the adoption of cryptocurrency.

An increase in transactions may be due to the Bitcoin Network records showing a three-year low for transaction fees, sitting at $0.025 as of January 1, 2019. Experts are saying these low transaction fees set a strong precedent for the mass adoption of cryptocurrencies that is expected for the possible bull market of 2019.

6. Support for BTC ETFs: Winklevoss Twins to Japanese Financial Services Agency

The endorsement of BTC Exchange Traded Funds continued as the Winklevoss brothers hosted a Reddit AMA on Monday 7th to illustrate their continued support in BTC. “We are as committed as ever to making an ETF a reality.” And it appears we aren’t too far from that reality as talks of the Japanese financial regulator, Financial Services Agency, is considering allowing BTC ETF within domestic markets.

Japan’s move opposes the Security & Exchange Commission as the Winklevoss’s applications for a BTC ETF continue to be rejected due to low liquidity and the number of unregulated exchanges happening on an international level.

7. Investors

The Winklevoss’s faith in Bitcoin was echoed this week by Hong Kong billionaire Li Ka-shing (23rd richest man alive at age 90), who, it has been revealed, invested in the latest funding round of Intercontinental Exchange’s crypto trading platform Bakkt through his venture capital firm Horizon Ventures. Li is worth $34.9B and has also invested in Bitpay and Blockstream.

On the other hand, Wall Street investor Bill Miller, who claims to be “a Bitcoin observer, but (not) a believer," said on interview with CNBC this week that he likes to include crypto in his portfolio because there is no obvious lasting correlation between crypto markets, stocks and bonds. “While crypto can be down, traditional markets can be up, and vice versa," to which he added “Bitcoin has the potential to be worth a lot and to be worth zero.”

8. Genesis Trading Claim 50% Growth in OTC Trades

The Bear market seemed to have little impact on Genesis Trading, as the firm claims a growth of 50% year-over-year in OTC trading and its lending business, Genesis Capital, nearly $1B in loans and borrows. Transactions amounted to over $24B between 36 cryptocurrencies, including BTC and ETH. Genesis Capital began issuing loans in BitCoin, Ethereum, XRP, BitCoin Cash, and other currencies as of March 2018.

CEO Michael Moro explains the flood of buy orders as the “Year-end saw quite a bit of selling for numerous reasons (e.g. tax loss selling and liquidation of crypto donations).” Genesis Trading is a SEC and FINRA registered broker.

9. Advances in international adoption and regulation

A survey commissioned by Bank of International Settlements indicated that even though CBDCs are in fact being researched by a significant number of reserve banks, only a handful of them intend to issue them in the near future. At the same time, in a January 9th report, the European Banking Authority has issued a recommendation for further research into cryptocurrency and claims it will perform “a number of actions” relating to it in 2019.

In a more assertive move, Ulaanbaatar, capital city of Mongolia, has partnered with stablecoin company Terra to release instant money transfer and lending services, for the payment of utility bill and government subsidies. Finally, in Thailand, the Ministry of Finance granted working licenses to three crypto trading companies and issued a working permit to a cryptocurrency broker and dealer, while it denied permits for two businesses seeking to become regulated exchanges.

10. Cryptocurrency Transactions Now Compatible with Facebook Messenger

Lite.IM bot now allows transactions through Facebook Messaging for coins like Bitcoin, Ethereum, Litecoin, and ZTX. Although users were initially concerned due to Facebook’s lack of privacy for user data, Lite.IM claims conversations aren’t stored by the company and encryption keys allow for privacy from third parties, including Facebook.

By targeting already popular social platforms, Zulu Republic, the company behind Lite.IM, believes the adoption of cryptocurrencies can be achieved more seamlessly than by trying to introduce new social media services.

11. Australia imposes travel ban and freezes funds of Bitconnect promoter

On January 5th, the Federal Court of Australia imposed a travel ban and froze funds of John Bigatton, a Bitconnect promoter listed as a director and shareholder and representative of Bitconnect Australia. Bigatton’s wife, Madeline Bigatton, is reportedly the director and shareholder of JB’s Investment Management, a company believed to be linked to Mr. Bigatton.

Madeline Biggaton is presumed to still be in hiding as she hasn’t been seen since March of 2018. The remaining assets of the Biggaton family have been frozen.

This was a volatile week for the crypto markets but a fairly quiet one in terms of announcements. At press time, traders are optimistic that most coins can turn around the downtrend that began on the 10th.

We wish you a pleasant weekend,

Coin360 Team