The Bitcoin price (BTC/USD) has made a swift comeback after experiencing a steep drop in the early hours of yesterday’s session.
The decline on Wednesday followed the news that major South Korean exchange Bithumb had been hacked. Having opened at $6,770.76, the original cryptocurrency fell to $6,611.88 in the morning. Most major, altcoins reacted in a similar way to the news.
"Whenever there's an exchange hack, people get scared and the price drops," Litecoin creator Charlie Lee said on CNBC’s TV programme “Fast Money”. “It happens all the time.”
However, Bitcoin managed to rein in the decline and successfully protect the $6,600 mark in subsequent trading. What’s more, the digital coin was able to bounce back to an intraday high of $6,821.56 in the afternoon. Eventually, Bitcoin finished the session at $6,776.55, slightly higher than its opening level.
According to Brian Kelly, founder and chief executive officer of cryptocurrency-focused investment firm BKCM, Bithumb’s prompt action after the hack helped the comeback.
“They halted withdrawals and they put everything into cold storage,” he said, as quoted by CNBC. “They immediately said, 'Any losses, we have reserves. We're going to pay for them. Nobody loses money,” Kelly added.
Another likely driver is a Wednesday report by Washington-based law firm Freeh, Sporkin & Sullivan, which stated that Tether had enough USD reserves to back its dollar-pegged digital tokens.
In recent months, there have been serious concerns that Tether has been issuing more tokens than the dollars it has in the bank and that it has been using them to prop up the Bitcoin price in times of weakness.
While not a full audit, the FSS report states the law firm received sworn and notarised statements from Tether’s two banks which indicated the company had approximately $2.55 billion in its accounts on June 1, Reuters reported yesterday.
“FSS is confident that Tether’s unencumbered assets exceed the balance of fully-backed USD Tethers in circulation as of June 1st, 2018,” the report said, as quoted by the newswire.
In today’s trading, the Bitcoin price stood at $6,737.00, as of 10:49 BST. The digital currency has gained 1.1% in the past 24 hours, according to data from cryptocurrency tracker Coinmarketcap.
For further information on how to buy and trade Bitcoin, see our comprehensive Bitcoin guide.