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5 Biggest Flaws of Cryptocurrency Industry in 2020

2020 was quite a controversial year for the cryptocurrency industry. It started with the bearish sentiment, triggering the collapse of the market. However, the second half of the year turned out to be positive for cryptocurrency, as COVID-related lockdown triggered a significant interest in it.

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Jan 06, 2021 at 14:52 // News

Cryptocurrency faced troubles in 2020

2020 was quite a controversial year for the cryptocurrency industry. It started with the bearish sentiment, triggering the collapse of the market. However, the second half of the year turned out to be positive for cryptocurrency, as COVID-related lockdown triggered a significant interest in it.

Although the year is considered to be generally bullish, the blockchain and cryptocurrency sector has experienced several challenges after all. The hardships ranged from hacks to regulation, bans to price volatility and lack of inherent value, scalability to cybersecurity issues, price manipulation to pump and dump initial coin offerings (ICOs) schemes, lack of price uniformity to transaction delays, and many others. 

Ripple got into serious trouble

Ripple got in trouble with the United States Securities and Exchange Commission (US SEC) which caused bad consequences for the coin and the market in general. The company was dragged into courts of law for breaching consumer-protection laws. Ripple conducted the sale of unregistered digital asset securities worth $1.3 billion in the form of XRP coins. Since the filing of this lawsuit, the price of XRP has been moving south.

According to CoinIdol, a world blockchain news outlet, several major cryptoasset exchanges have delisted XRP in an attempt to avoid risking being heavily fined by the US SEC for trading XRP coins. Some of those exchanges include OSL, B2C2, CrossTower and Beaxy – Bitstamp also halted the selling and buying of XRP.

The coin has plunged by over 45% in the last days of 2020 and is continuing to decline if things don’t change. XRP even touched a low of $0.19467 (from a high of $0.768019). This action by the agency might weaken the trust in cryptocurrency in general. This was a big loss for the entire digital currency industry.

Ripple_got_into_serious_trouble.jpg

Hackers targeted DeFi protocols and exchanges

Half of 2020 digital currency hacks are from Decentralized Finance (DeFi) Protocols and Exchanges. In the first and second quarter of this year, DeFi dominated about 45% of all thefts, scams and cyberattacks (over $51.3 million or 40% of attacked volume). In the third and fourth quarter of 2020 Decentralized Finance had a share of 50% of all thefts, scams and hacks (over $47.5 million or 14% of attacked volume).

KuCoin, the Singapore-based cryptoasset was hacked and more than $281M stolen by unknown thieves in September this year. The exchange was forced to halt its trading services. However, the exchange revealed it has resumed the deposit and withdrawal services of all coins traded on its platform in November. Some of the tokens such as Ocean Protocol (OCEAN), that were recovered from the remains of the hack were returned to KuCoin wallets.

Currently, in this year alone, DeFi composes almost 21 percent of 2020 cyberattack and theft volume. Crypto money laundering increased – funds from biggest attacks such as that of KuCoin, were illegally stolen and laundered via DeFi. The growth in hacks likely hinged on the contemporary DeFi boom.

There were over 19 DeFi cryptoasset hacks in 2020. Some of the biggest DeFi hacks of 2020 include bZx ($954,000 + $8 million – was hacked twice), dForce and Lendf.me ($25M), Hegic ($48k), Maker ($8 mln), Harvest ($24 mln), Argent, Bancor, Eminence ($15 mln), SharkTron ($260 mln), Balancer ($500k), Uniswap ($530k), UniCats ($140k), Opyn ($370k), Lien, YAM ($750k), Soft Yearn ($250k), PercentFinance ($1 mln) and Akropolis ($2 million).

A loss of over $50M was registered mainly through bugs, exploits, and hacks. Even though a good number of losses were traced and recovered, users of DeFi services have to be extra wary when using and intermingling with apps.

UK regulator banned crypto asset-based products for retail traders

After a year-long review, the UK’s Financial Conduct Authority (FCA), a financial watchdog, banned the sale, promotion and circulation of particular cryptocurrency-based products for retail consumers and investors. r

The FCA revealed that the unregulated digital currencies are ‘ill-suited’ to retail venture capitalists and consumer for a good number of reasons such as unexpected losses, price volatility, lack of reliable basis for valuation, lack of clear reasons for investment, and less or poor understanding of how cryptocurrency works.

The FCA banned companies operating in the UK from selling, promoting and circulating products that monitor the price of cryptocurrencies. These products include contracts-for-difference (CFDs), futures, exchange-traded notes (ETNs) on cryptoassets, and options. The ban will come into force on Jan 6, 2021. This effort by FCA will make retail investors save up to 53M from the ban.

On the other side, it is a big blow to online trading platforms, such as IG Group, Plus500, CMC Capital Markets, etc., that have been trading cryptocurrencies and these banned products. So far, shares in the three aforementioned platforms have lost 3% following the FCA’s announcement of the ban.

Crypto-related scams rocked 2020

Due to the Covi-19 pandemic, the cryptocurrency community grew considerably. The price of Bitcoin increased by more than 226% and that of Ethereum soared by over 227.7%. But as the community was growing, criminal activities were also growing at a rocket speed. More and more fake and scams activities – including fake ICOs, fake exchanges and suspicious trade groups, were introduced in 2020 that made people fall victims and lose their hard-earned money. BTC always attracts all kinds of intentions especially when there is a bull run in the cryptoasset market.

Crypto-related_scams_rocked_2020.jpg

Some of the most prevalent cryptocurrency scams that happened this year include the following: Chain letter; many Ugandans lost more than UGX. 10 Billion (approx. $2,715,100) in digital currency scam managed by Dunamiscoins Resources Limited; social media hacks such as a hack on Twitter that involved many celebs including India’s Prime Minister Modi Narendra; exchanges scams such as BitKRX that attracted customers with fake offers and promises of abnormal profits; fake ICOs such as Big Coin that stole over $6 mln from crypto users; DeFi rug pulls such as Amplyfi.money that collect more than 2500 Ethereum from venture capitals and then vanished into thin air, Burn Vault Finance ($BFV) also did a similar thing; cloud mining schemes – some men identified as Silviu Balaci, Matthew Brent and Jobadiah Sinclair, were put behind bars for 5 years for frauding over $722 mln in digital currencies the a fake scheme called BitClub Network; hardware wallet theft such as Ledger Phishing Scam that was targeting cryptoasset hardware wallet users; fake mining rigs (compromised various accounts on marketplaces including that of Alibaba and began selling their own fake goods); and many others.

Ransomware attacks

In 2020, ransomware attacks were very rampant, especially on big organizations. Some of the common types of ransomware in 2020 included Crypto malware, Lockers, RaaS, Maze, Scareware, Doxware, etc. Additionally, we saw many ransomware attacks that shocked the world and these included Bad Rabbit, Cryptolocker, Petya, TeslaCrypt, etc.

The top ransomware attacks that happened in 2020 include the Cognizant Ransomware Attack that happened in April; the Magellan Health Ransomware Attack that also took place in April – data worth 1.7 million was breached and attackers demanded a ransom to be paid in form cryptocurrency to make them stop the attacks; the US-based Communication and Power industries (CPI) attack that saw one of the giant electronics conglomerates of the defence and comms markets paying a ransom of almost $500k in crypto to unknown ransomware attackers; University of California San Francisco (UCSF) that happened in June that compromised the information of students and this forced the UCSF School of Medicine to pay a ransom of about $1.14 million in form of Bitcoin to attackers; Canon (lost 10GB of data), Carnival Corporation, Baltimore County Public Schools and Advantech were also attacked in the same way – the latter who is a manufacturer of IoT chips paid a ransom of 750 Bitcoin from vendors.

Source: https://coinidol.com/flaws-cryptocurrency-industry/

Blockchain

TA: Ethereum Steadies Above $1,280, Why ETH Could Restart Its Rally

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Ethereum corrected lower and tested the $1,250 support zone against the US Dollar. ETH price is consolidating above $1,280 and it looks set for a fresh increase in the near term.

  • Ethereum is holding gains above the $1,250 and $1,280 support levels.
  • The price is currently correcting lower from $1,385, but it is above the 100 hourly simple moving average.
  • There is a crucial contracting triangle forming with support near $1,275 on the hourly chart of ETH/USD (data feed via Kraken).
  • The pair could correct again, but it is likely to remain well bid above the $1,250 and $1,275 support levels.

Ethereum Price is Holding Key Support

Yesterday, we saw a downside correction in Ethereum below the $1,350 and $1,300 support levels. ETH price even spiked below the $1,280 support level and the 100 hourly simple moving average.

It tested the $1,250 support zone and recovered steadily above $1,300. There was a break above the $1,350 resistance and a close above the 100 hourly simple moving average. However, ether price failed to surpass the $1,400 resistance zone.

A high was formed near $1,388 and the price is currently correcting lower. It is testing the 50% Fib retracement level of the upward wave from the $1,251 swing low to $1,388 high. There is also a crucial contracting triangle forming with support near $1,275 on the hourly chart of ETH/USD.

Ethereum Price

Source: ETHUSD on TradingView.com

The triangle support is close to the 76.4% Fib retracement level of the upward wave from the $1,251 swing low to $1,388 high. On the upside, the triangle resistance is near the $1,360 and $1,365 levels.

The main resistance is near the $1,385 and $1,400 levels. A successful close above the $1,400 resistance could open the doors for a fresh surge towards the $1,450 and $1,480 levels.

Dips Supported in ETH?

If ethereum struggles to remains stable above $1,300, it could correct further. An initial support on the downside is near the $1,280 level and the triangle trend line.

The main support is now forming near the $1,250 level. If ether fails to stay above the $1,250 support, it could decline further towards the $1,180 and $1,165 support levels.

Technical Indicators

Hourly MACDThe MACD for ETH/USD is slowly moving in the bullish zone.

Hourly RSIThe RSI for ETH/USD is currently close to the 50 level.

Major Support Level – $1,280

Major Resistance Level – $1,380

Source: https://www.newsbtc.com/analysis/eth/ethereum-steadies-above-1280/

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Blockchain

Kraken Daily Market Report for January 20 2021

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Overview


  • Total spot trading volume at $1.68 billion, 8% higher than the 30-day average of $1.55 billion.
  • Total futures notional at $750.6 million.
  • The top 5 traded coins were, respectively, Bitcoin, Ethereum, Tether, Polkadot, and Cardano.
  • Strong returns today from Curve Dao (+17%) and Mana (+8.9%).

January 20, 2021 
 $1684.5M traded across all markets today
 Crypto, EUR, USD, JPY, CAD, GBP, CHF, AUD 
XBT 
$34827. 
↓2.8% 
$693.8M
ETH 
$1320.9 
↓3.3% 
$547.8M
USDT 
$1.0004 
↓0.01% 
$168.2M
DOT 
$17.561 
↑7.3% 
$98.1M
ADA 
$0.3645 
↓0.6% 
$37.9M
XRP 
$0.2925 
↓0.7% 
$30.6M
LINK 
$21.131 
↑2.8% 
$30.5M
USDC 
$0.9999 
↑0.0% 
$24.9M
LTC 
$147.10 
↓3.0% 
$23.5M
XLM 
$0.2894 
↓2.8% 
$11.8M
BCH 
$493.17 
↓2.5% 
$11.0M
XTZ 
$2.8637 
↓0.24% 
$6.62M
ATOM 
$8.6476 
↓2.4% 
$5.85M
GRT 
$0.5118 
↓4.9% 
$5.32M
REP 
$23.266 
↑5.5% 
$5.13M
DAI 
$0.9998 
↓0.02% 
$4.99M
FIL 
$22.405 
↓1.2% 
$4.5M
UNI 
$8.7212 
↑1.8% 
$4.4M
YFI 
$33270. 
↓3.3% 
$4.4M
KSM 
$106.22 
↑4.3% 
$4.38M
XMR 
$151.54 
↓3.6% 
$3.86M
AAVE 
$189.44 
↑1.6% 
$3.78M
WAVES 
$7.0911 
↑0.08% 
$3.46M
CRV 
$1.5485 
↑17% 
$3.39M
EOS 
$2.7554 
↓1.1% 
$3.25M
DASH 
$120.02 
↓3.4% 
$3.11M
ALGO 
$0.5353 
↑2.8% 
$2.49M
ZEC 
$98.494 
↓3.6% 
$2.29M
NANO 
$3.3128 
↓5.5% 
$2.28M
OMG 
$3.7666 
↓2.3% 
$2.21M
SNX 
$15.334 
↑1.2% 
$1.92M
TRX 
$0.0302 
↓1.3% 
$1.89M
KAVA 
$2.1977 
↓1.1% 
$1.54M
QTUM 
$3.1710 
↑0.12% 
$1.25M
ICX 
$0.7395 
↑6.3% 
$1.13M
COMP 
$208.88 
↓1.3% 
$1.11M
BAT 
$0.2737 
↑1.8% 
$1.11M
XDG 
$0.0089 
↓0.8% 
$1.07M
MANA 
$0.1321 
↑8.9% 
$1.02M
KEEP 
$0.3149 
↓2.9% 
$863K
SC 
$0.0050 
↑1.5% 
$812K
ETC 
$7.7530 
↓0.4% 
$695K
KNC 
$1.2653 
↑0.16% 
$684K
MLN 
$40.959 
↓4.8% 
$649K
LSK 
$1.4740 
↑6.9% 
$536K
REPV2 
$21.115 
↓2.8% 
$521K
OXT 
$0.2914 
↓0.23% 
$483K
PAXG 
$1880.9 
↑1.6% 
$406K
BAL 
$21.470 
↓2.7% 
$244K
GNO 
$115.89 
↓4.0% 
$223K
ANT 
$3.9536 
↓1.3% 
$217K
STORJ 
$0.3956 
↓3.5% 
$191K
TBTC 
$36825. 
↑1.6% 
$76.9K



#####################. Trading Volume by Asset. ##########################################

Trading Volume by Asset


The figures below break down the trading volume of the largest, mid-size, and smallest assets. Cryptos are in purple, fiats are in blue. For each asset, the chart contains the daily trading volume in USD, and the percentage of the total trading volume. The percentages for fiats and cryptos are treated separately, so that they both add up to 100%.

Figure 1: Largest trading assets: trading volume (measured in USD) and its percentage of the total trading volume (January 20 2021)



Figure 2: Mid-size trading assets: (measured in USD) (January 20 2021)



Figure 3: Smallest trading assets: (measured in USD) (January 20 2021)



#####################. Spread %. ##########################################

Spread %


Spread percentage is the width of the bid/ask spread divided by the bid/ask midpoint. The values are generated by taking the median spread percentage over each minute, then the average of the medians over the day.

Figure 4: Average spread % by pair (January 20 2021)



.


#########. Returns and Volume ############################################

Returns and Volume


Figure 5: Returns of the four highest volume pairs (January 20 2021)


Figure 6: Volume of the major currencies and an average line that fits the data to a sinusoidal curve to show the daily volume highs and lows (January 20 2021)



###########. Daily Returns. #################################################

Daily Returns %


Figure 7: Returns over USD and XBT. Relative volume and return size is indicated by the size of the font. (January 20 2021)



###########. Disclaimer #################################################

The values generated in this report are from public market data distributed from Kraken WebSockets api. The total volumes and returns are calculated over the reporting day using UTC time.

Source: https://blog.kraken.com/post/7516/kraken-daily-market-report-for-january-20-2021/

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Blockchain

83% of cryptocurrencies that peaked in 2018 are still down by 90%

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Data published by crypto market data aggregator Messari shows that 83% of crypto assets that tagged all-time highs in January 2018 are still down by at least 90%.

The data was spotted by CMT Digital analyst Matt Casto, who tweeted data showing the average return-on-investment, or ROI, of crypto assets sorted by the year in which they posted record price highs.

The data set included 410 assets that posted record prices during 2017 or later, with 2018’s 157 star coins performing the worst with an average of -90.71% since the previous ATH. 

2017’s top crypto’s have since crashed by 82% on average, while 2019’s crop is down 72%, and 2020’s standouts have shed 53%.

The data may help support the ‘great repricing’ concept, that the capital that once flowed into the “ghost-chain” layer-one blockchains that dominated the sector in 2017 and 2018 is now being redirected towards the nascent DeFi sector.

The concept is even a trading strategy for some, with dHedge pool manager Wangarian describing his strategy as longing “tokens that obtain direct value accrual (DeFi)” while shorting “dogs**t L1s that have no value accrual whatsoever.”

However, despite the poor performances of many altcoins from yesteryear when compared to their record highs, many older altcoins have still produced enormous percentage gains since bottoming out.

Since finding local lows during the “Black Thursday” crash of March 2020, Cardano (ADA) has increased nearly 1,700%, Zilliqa (ZIL) is up 2,670%, and Decred (DCR) has gained 14,130% from their respective price floors.

Source: https://cointelegraph.com/news/83-of-cryptocurrencies-that-peaked-in-2018-are-still-down-by-90

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