Earlier this month, what was presumed to be the safest crypto exchange in the world was hacked, resulting in more than 7,000 BTC going missing. Despite this scary news breaking, Bitcoin and crypto markets carried on climbing, higher and faster than before the hack. New data is pointing to the recent spate of hackings being a catalyst for upwards market growth, as more traders look to pull their crypto from exchanges and put it into cold storage. The Tether debacle is also having a huge impact on the upwards price movement. Could these two events be linked to the positive movements we have all been enjoying?
Massive Crypto Outflows
According to data from TokenAnalyst, crypto withdrawals from top crypto exchanges including Bitfinex, BitMEX, Binance, and Kraken surged past the $622 million mark last week alone. That number adds up to a sweltering $1.7 billion since April 26th 2019. As more people pull their crypto from exchanges, the liquidity available drops – meaning there is a premium paid for all trades. This could very well be one of the major factors that influenced the price of Bitcoin over the past few weeks.
More Hacks Creating More Exchange Fear
It’s not just Binance that has the crypto world shaking in its boots. This year has already seen a spate of hackings and exit scams, costing the crypto industry billions in losses. Cryptopia kicked off the year, being hacked continuously with more than 17,000 wallets being drained of funds. Next, DragonEx was hacked with an undisclosed amount of crypto being stolen, while Bithumb was hacked in April, losing $18.5 million in the process. This swathe of hacks on reputable exchanges is enforcing the Proof of Keys movement and is partially responsible for the upwards price movements.
The Tether Mess
When it comes to Tether, mess is a rather gentle way to describe the situation. There have been rumors that Tether was used to manipulate the price of Bitcoin as far back as 2016, but new evidence has come to light that Tether is not actually fully backed by USD. After the news broke, exchanges began the delisting process and Bitfinex has been forced to cut its relationship with its sister company. This caused many people to start selling their USDT and head into Bitcoin. In turn, the increased buy volume helped to push up the price and create a nice rally for crypto markets.
It very much appears as if it was the perfect storm of news that helped push Bitcoin and crypto markets to yearly highs. The upwards momentum might have taken a slight break, but we are now entering a fresh phase of accumulation and we could see $7,500 as a new platform for Bitcoin to bounce from.