After spiking around $4100 yesterday (and above $4200 Tuesday), Bitcoin has suddenly declined sharply this morning down to around $3875 as of press time.
The past week’s activity shows a rather bizarre trend pattern where Bitcoin jumped over $100 in a quick spike Monday before plummeting back under $4000 just hours ago in a chart visual you might call a ‘table’ or ‘mesa’ pattern.
Some analysts are blaming part of the Bitcoin fall and other red ink in the cryptocurrency marketplace today, following a 51% attack on Ethereum classic that has rocked investor confidence by illustrating how damaging one of these attacks can be.
As we reported a couple of weeks ago, a 51% attack involves parties holding more than half of a cryptocurrency hash rate that can then pick and choose which transactions get credibility in the system.
This leads to all sorts of manipulation in which parties can double spend and fraudulently report transactions in order to enrich themselves.
CCN provides a unique picture into how the Ethereum classic 51% attack happened and how it was able to pull the wool over the eyes of so many exchanges.
“The attacker moves the coins to other addresses, makes deposits, then withdraws them to safe addresses,” a no-byline story revealed late last night. “The attack is simple at its heart: make a deposit, then make a withdrawal. He has the hashpower to ensure that the transactions he wants to exist will and that the ones he’d rather be forgotten are. In essence, he doubles his money simply by moving the coins to other addresses. Then he moves the original coins to safety.”
One notable aspect of this attack is the dwell time – analysts suggest the initial attack happened Monday and was under the radar for days.
Investors are also worried that a similar attack could happen to Bitcoin.
Now exchanges are closing the gates as they assume the parties behind the 51% attack will be trying to fence their fraudulent Ethereum holdings.
One exchange, Gate.io, is offering refunds to investors.
“Gate.io Research has published its analysis of ETC transactions on its platform during the alleged attack,” Marie Huillet reported last night at Cointelegraph, citing evidence of “rollback transactions” worth a total of 54,200 ETC. Gate.io reports that the incident occurred over a period of 4 hours between 0:40 and 4:20 Jan.7, 2019 UTC, during which the transactions were normally confirmed on the blockchain and then subsequently invalidated after the malign network rollback. … Gate.io states it will compensate its users’ losses, stating ‘Gate.io will take all the loss for the users.’ The exchange also advises other crypto trading platforms to block transactions stemming from the identified suspect addresses.”
Today’s chaos illustrates the kind of market impact that can be generated by a bad actor fraudulently reporting transactions. Keep an eye out as we continue to look at BTC behavior and other indicators on a market day that has started out – poorly.