Bitcoin enthusiasts face bigger problems than twitter scam

July 18, 2020 John Bitcoin 0

By Vildana Hajric

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% in Thursday’s session to trade as low as $9,037 in New York — just points away from testing the critical $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 $10,000.

“A break below $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 $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.

You too can lose money to a Twitter hacker, and how!

Grim Scenario

This time it was just a cryptocurrency scam. But what happens if hackers infiltrate Twitter again and take aim at financial markets? It’s easy to imagine a scenario where, instead of tweeting about Bitcoin, a hacked Elon Musk account plunges Tesla Inc.’s stock into a tailspin. It would only take a few seconds for a rogue @realDonaldTrump to send financial shockwaves around the world. (Authors: Abhishek Vishnoi, Anchalee Worrachate and Theo Golden)

​Modern-day Investing

For investors who rely on platforms like Twitter to navigate markets, Wednesday’s cyber attack on the accounts of prominent US business and political leaders is a reminder that no source of information is infallible. It also highlights the myriad risks posed by hackers in an era when decisions about trading, and much else, are increasingly made by hyper-fast computers instead of humans.

Expert Take

“It definitely exposes the vulnerability of our own credentials and processes,” Deven Choksey, a strategist at KRChoksey Investment Managers Pvt in Mumbai. “A false or mischievous communication can pose a very big and serious threat to the entire financial system.”

​In a Matter on Mins…

The hack took place just after 4 p.m. New York time on Wednesday, after U.S. markets closed and before the Asia open. Within a short span of time, the Twitter accounts of high-profile figures such as Bill Gates and Kayne West, along with companies like Uber Technologies Inc. and Apple Inc., were urging followers to send funds via Bitcoin.

​Looming Risk

Twitter said it had detected “a coordinated social engineering attack by people who successfully targeted some of our employees with access to internal systems and tools” and has started an investigation into the incident. The company’s shares fell as much as 4.7% on Thursday. Many of the details behind the attack and what other information the criminals could have accessed are still unknown. For now, the hack doesn’t seem to have affected markets, but the potential for chaos and confusion from similar events remains.

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 $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.