Bitcoin Price Fragile After UpBit Hack But Bullish Breakout Above $10,000 Possible
UpBit was hacked on 27 November 2019. $50 million worth of ETH tokens was stolen
South Korea’s UpBit exchange has been hacked, according to a service update posted here, leading the bitcoin (BTC) price to slip.
BItcoin’s confirmation of strong support above $6,500 gave bulls heart this week, with the price bouncing 10% from the trough of the recent price crash.
But the ever-present danger of a crypto exchange hack to throw a spanner in the works has landed like a thud in the laps of hopeful bulls.
342,000 ETH stolen from UpBit exchange
UpBit reports this morning that 342,000 ETH has been moved to “an unknown address” ( 0xa09871AEadF4994Ca12f5c0b6056BBd1d343c029 ), which in layperson’s language means $50 million worth of the second-most valuable crypto token has been stolen from the platform.
Happily trading above $7,200, bitcoin immediately dropped back below $7,000.
Failure to push on beyond the intraday high of $7,350 printed on 25 November was always going to be a critical test at this juncture and the UpBit hack has not helped case for a bullish reversal.
However, the reaction to the latest hack could have been much worse, which indicates that the chance of market participants looking past this latest security scare are good.
At times like this, pulling out on the BTC/USD chart is useful.
From June to November last year the bitcoin price was in a $1,000 trading range (see chart below) with $6,500 its mid point. Strong support in that region is confirmed by the trading interest as shown by the volume profile at those price levels and in the 10% bounce we highlighted above.
Katie Stockton, managing partner at Fairlead Strategies, pencil’s $6,100 as the key support level.
She sees a breakout above $10,000 as a “a nice positive catalyst from a technical perspective”, but says traders will need to keep a watching brief for a confirmed breakdown or a bullish breakout, with the bitcoin price falling further below the 200-day moving average.
Bitcoin price long-term ascending trend line holds, for now
Zooming out further on the 1-week log chart and the bullish trend line is still very much intact (see chart below). That raises the stakes, in confirming that the bitcoin market is hovering above crucial support. A breach of the trend line would be indicative of a move toward $5,500.
What is the bitcoin investor to do? If you are not a trader as such but an investor, a dollar cost averaging strategy of drip feeding into the market remains the best play – old hands of a hodling persuasion will no doubt concur, as they have seen all this volatility bearish angst many times before.
The green Ichimoku cloud seen above should also encourage bullish sentiment on a technical view
As for the chances of bitcoin pushing higher, we will get some evidence of which the wind is blowing on that one over the next few hours; bitcoin has managed to poke its head back above $7,000 as I write this report.
However, with the death cross in play, the relief rally is still fragile.
UpBit customers to be reimbursed for hack losses
Back with the UpBit hack, the chief executive, Lee Seok-woo, has promised to reimburse customers for any losses, helping to clam nerves.
He also says that “all cryptocurrencies in hot wallets have been transferred to cold wallets”.
The UpBit boss adds that it will take two weeks for deposits and withdrawals to resume.
It’s never a good look for an exchange when clients can’t move their money out, so this is yet another blow to the reputation of crypto exchanges, given the other high-profile hacks this year at Bithumb and Binance.
Disclaimer: This article is not meant to give financial advice. Any additional opinion herein is purely the author’s and does not represent the opinion of EWN or any of its other writers. Please carry out your own research before investing in any of the numerous cryptocurrencies available. Thank you.