The 2018 selloff in cryptocurrencies deepened over the weekend, wiping out about $42 billion of market value and extending this year’s slump in bitcoin to more than 50%.
Some observers pinned the latest retreat on an exchange hack in South Korea, while others pointed to lingering concern over a clampdown on trading platforms in China. Cryptocurrency venues have come under growing scrutiny around the world in recent months amid a range of issues including thefts, market manipulation and money laundering.
Bitcoin dropped about 12% between late Friday afternoon and Monday morning. By 4:30 p.m. Pacific time Monday it was quoted at $6,799 on Coindesk. That brings its decline this year to 51%. Most other major virtual currencies also retreated, sending the market value of digital assets tracked by Coinmarketcap.com to a nearly two-month low of $298 billion. At the height of the global crypto-mania in early January, they were worth about $830 billion.
Enthusiasm for virtual currencies has waned partly due to a string of cyber heists, including the nearly $500-million theft from Japanese exchange Coincheck Inc. in late January. While the latest hacking target — a South Korean venue called Coinrail — is much smaller, the news triggered knee-jerk selling, according to Stephen Innes, head of Asia Pacific trading at Oanda Corp. in Singapore.
“This is ‘If it can happen to A, it can happen to B and it can happen to C,’ then people panic because someone is selling,” Innes said.
Coinrail said in a statement on its website that some of the exchange’s digital currency appears to have been stolen by hackers, but it didn’t disclose how much. The venue added that 70% of the cryptocurrencies it holds are being kept safely in a cold wallet, which isn’t connected to the Internet and is less vulnerable to theft.