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Jul 16, 2020

Bitcoin enthusiasts face bigger problems than Twitter scam

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 A Twitter hack this week featured Bitcoin in one of its most high-profile scams. But technical indicators suggest that could be just the start of problems for investors in the largest cryptocurrency.

Bitcoin fell as much as 1.9 per cent in Thursday’s session to trade as low as US$9,037 in New York -- just points away from testing the critical US$9,000 support level. In addition, the GTI Vera Convergence Divergence Indicator, which measures up and down shifts, triggered a new sell signal, the first since early June, when the coin failed to breach US$10,000.

“A break below US$9,000 would raise a yellow warning flag on Bitcoin,” said Matt Maley, chief market strategist for Miller Tabak + Co. A subsequent drop below the mid-May low of US$8,636 would signify a red flag, he said.

Bitcoin’s retreat follows news that Twitter accounts of some of the most prominent U.S. political and business leaders -- including Barack Obama, Joe Biden, Jeff Bezos and Warren Buffett -- were hacked Wednesday in an apparent effort to promote a scam involving the cryptocurrency.

The accounts sent out tweets promising to double the money of anyone sending funds via Bitcoin within 30 minutes, prompting the popular crypto exchange Coinbase Inc. to block its users from sending money to the address. The hack duped people into sending at least US$120,000 worth of Bitcoin to an anonymous online wallet, and more than half of that total has already been spirited to other accounts, Bloomberg News reported.

“Yesterday’s Twitter hack was a great reminder of how vulnerable cryptocurrency traders are to hacking incidents,” said Edward Moya, senior market analyst at Oanda. “Malicious activity has always been a concern for Bitcoin and those concerns are not going away anytime soon.”

To others, though, the event is another example of how blockchain technology -- the digital ledger that underpins cryptocurrencies -- could help bolster security for a company like Twitter. “Because of this technology, social media could undergo a major structural change to make this insecurity and impermanence, more permanent and tamper proof,” said Keld van Schreven, co-founder and managing director of KR1 Plc.

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