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What is Causing The Bitcoin Market to be Down Again?

The crypto currency market cap dropped $53 billion in the last 24 hours. This was a cause for alarm as most people believe that the market is beginning to recover. However, others are still cautious and still anticipate a severe drop before a true bull market is in sight. Despite the abundance of possible causes to this unexpected dip, uncertainty remains the true indicator of the market. Nonetheless, there are a few factors that seem to correlate and explain what is causing Bitcoin‘s price to drop again. Some reasons are: the MyEtherWallet (MEW) hack, a new bug  found in smart contracts, and possible bank manipulation.

MYEhterWallet Hack

Around 12 UTC pm April 24th , two Google public DNS (Domain Name Servers) were hijacked. Users were tricked and redirected to a facsimile (phishing) site. And while the MEW wallet itself was not the target of the attack, it seems apparent that the attackers were able to obtain valid login credentials from unaware users. This is due to users reporting losses of approximately $150,000 in Ether coins. The attack was quickly detected and the investigation continues as do attempts to trace the stolen Ether.

BathOverFlow

A day after the Google DNS attack, the Hong Kong based crypto exchange OKEx suspended all trading of ERC20 tokens. This was due to the discovery of a ‘bug’ called “BatchOverFlow” in Smart contracts built into the Ethereum token.  This particular bug spontaneously generates an extremely large amount of tokens which it then deposits into an active Ethereum account. These tokens are then up for trade on any exchange artificially inflating the price of Ethereum. Presumably only 12 smart contracts are part of the attack including the “BeautyChain” (BEC) token. However, a precise number of tokens affected by the attack is not known. In addition to Ethereum, BEC token transactions are also temporarily on hold.

Poloniex

At about the same time OKEx was halting trading of ERC20 tokens, the exchange Poloniex was doing the same. Poloniex announced that it was reviewing all smart contracts for exposure to the BatchOverFlow bug. There is some speculation that these attacks appear coordinated in order to reverse the rising price of Bitcoin. This belief is in part due to the purchase of the Poloniex exchange by Goldman Sachs-funded Circle Internet Financial Ltd. Some believe the true intention of the purchase is to exert some control over the crypto market. The announcement the following day made by Goldman Sachs CEO Lloyd Blankfein stating that crypto currencies pose a business risk to the firm, seems to support that this dip is bank interference.

These latest attack highlight the importance of verifying the authenticity of a website before attempting to log in. And while the automated security in place helps detect the attack and protect investors, the best solution remains to store crypto currency in a hard (offline) wallet like Trezor or Ledger Nano S. And the possible bank manipulation of the exchange Poloniex also exposes a high level of market manipulation exists in the crypto world making trading all that much riskier and returns unpredictable.

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