Yet another cryptocurrency exchange has been hacked, with the potential loss of $40m in stolen coins and Bitcoin (BTCUSD) has taken the news rather badly. After opening 2018 at $13,435, today we find Bitcoin valued at a mere $6760, retaining just above 50% of its Jan 2nd value, and two-thirds of its value from its nearly high of $19,460 in December 2017. This plays into the major (and evidently justified), concern of investors around the vulnerability of cryptocurrencies to digital bandits. This actually benefits CFD providers since investors are properly insulated against that risk.
Whilst we identified the BTC bear pressures a month ago, and the market has performed largely as anticipated, ‘market shock’ events like this tend to tear up any rational analysis. For the short-term at least, we’d consider these levels to be good places to start building a long position, as this down move seems an overreaction to a minor blip. However it also underlines the fragility of the BTC market, and how susceptible it is to the next, inevitable security breach.