Bitcoin: BTC/USD Eyes $600 following Last Week’s Selloff

The price of bitcoin rose on Wednesday and appeared poised to re-test $600 after a volatile two weeks triggered a sharp selloff of the cryptocurrency.

The BTC/USD exchange rate rose 0.8% to $589.67, according to CoinDesk. Bitcoin’s price approached $599 on Tuesday before consolidating below $580. As of Wednesday, the BTC/USD was trading between $580-$590, as traders looked for new catalysts to drive the market higher.

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The US dollar was trading lower across the board on Wednesday, falling more than half a percent against a basket of fiat currencies.

Volatility returned the digital currency market last week after Hong Kong-based exchange Bitfinex reported a massive security breach. Nearly 120,000 bitcoins valued at around $$70 million were stolen in the high profile attack. Bitfinex has said it was working toward “socialized loss scenario” that would be spread out evenly among its customers. In practical terms, users will lose 36% of their assets following the cyber attack.

“We have decided to generalize losses across all accounts,” Bitfinex said in a statement. “Upon logging into the platform, customers will see that they have experienced a generalized loss percentage of 36.067%.”

According to analysts, Bitfinex’s plan to socialize losses has been partially responsible for the cryptocurrency’s failure to stage an even bigger rally following the security hack. That’s because the socialization experiment raises concerns that bitcoin exchanges lack a comprehensive insurance plan to protect their customers. It also sets a concerning precedent for a market still struggling with regulatory certainty.

The latest hack was the first cyber attack on the exchange. In may 2015, 1,500 bitcoins were stolen from Bitfinex, according to BBC.

Prior to the latest security breach, bitcoin was enjoying a period of stability rarely seen in its brief but tumultuous history. Prices surged to two-year highs in June and had been trading relatively steady until early August.

Bitcoin under went its second-ever halving event last month. Beginning on July 9, digital currency miners will receive 12.5 bitcoins for every block they create, compared to the 25 they received over the previous four years.

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Sam Bourgi is a financial market analyst for economiccalendar.com. He has more than six years of progressive experience in economic and financial analysis, research consulting and sectoral analysis. As a published author in government, peer-reviewed, online and industry sources, he has developed a fundamental approach to the financial markets with a broad focus on stock indices, commodities and the technology sector. He earned his Bachelor’s Degree from the University of Windsor and Master’s degree from McMaster University.