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Poloniex To Repay Lenders In Bitcoin After Funds Lost To Flash Crash

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Traders on Poloniex have started receiving refunds of the funds they lost in May after the platform experienced a flash crash involving CLAM.  The announcement that the exchange has started crediting accounts belonging to lenders with the funds they lost came through an official blog post.

The exchange will pay back lenders by covering trading fees. The flash crash which hit the marketplace occurred on the 26th of May.

The crash was a result of the exchange allowing margin trading on CLAM, a coin which had been credited to traders who had holdings of Bitcoin, Dogecoin and Litecoin on the platform. CLAM lost 77% of its value in a 45-minute long market crash. The flash crash resulted in traders losing 1800 Bitcoin with a market value of $13.5 million during that period.

The total number of lenders who lost their funds on Poloniex is equal to 0.4% of Bitcoin holders and these lenders lost 16.2% of their holdings. The lost funds were held in a pool where they were meant to cover defaulted loans.

Cause Of the Crash and Remedies

According to Poloniex, the crash came about as a result of high-velocity sell orders, which combined with low levels of liquidity

within CLAM’s trading margin. The low liquidity is a result of loan defaulters which the exchange says it was pursuing at the time. It is not clear whether the loans were paid back or whether Poloniexfound another solution to the challenge.

After the crash, the exchange stopped margin trading on CLAM, MAID, BTS, and FCT. This was done to protect the exchange and its users from the possibility of losing more funds through another flash crash.

Repayment to lenders started on the 14th of June. The repayments started with 180 Bitcoins being shared among 10% of the lenders who lost their funds. The exchange has come up with a policy which dictates that lost funds will be replaced as trading fees.

Lenders who lost funds will not pay any trading fees until their lost funds are fully recovered.

One of the Best Crypto Exchanges

Back in January, Poloniex was given an A rating as one of the best crypto exchanges in the business. The rating was given by ICORating, an independent analyst which assessed 135 crypto exchanges across the world.

The exchanges considered have a daily trading volume in excess of $100,000, and the factors considered include web security, account security, DoS attack protection, and registrar.

Source. bitcoinexchangeguide.

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Bitcoin (BTC/USD) forecast and analysis on January 24, 2020

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Cryptocurrency Bitcoin (BTC/USD) is trading at 8563. Cryptocurrency quotes are trading above the moving average with a period of 55. This indicates a bullish trend on Bitcoin. At the moment, cryptocurrency quotes are moving near the lower border of the Bollinger Bands indicator stripes.

Bitcoin (BTC/USD) forecast and analysis on January 24, 2020

As part of the Bitcoin exchange rate forecast, a test level of 8420 is expected. Where can we expect an attempt to continue the growth of BTC/USD and the further development of the upward trend. The purpose of this movement is the area near the level of 9160. The conservative area for buying Bitcoin is located near the lower border of the Bollinger Bands indicator strip at 8400.

Bitcoin (BTC/USD) forecast and analysis on January 24, 2020

Cancellation of the

option to continue the growth of the Bitcoin exchange rate will be a breakdown of the lower border of the Bollinger Bands indicator stripes. As well as a moving average with a period of 55 and closing of quotations of the pair below the area of ​​8320. This will indicate a change in the current trend in favor of the bearish for BTC/USD. In case of breakdown of the upper border of the Bollinger Bands indicator bands, we should expect an acceleration in the fall of cryptocurrency.

Bitcoin (BTC/USD) forecast and analysis on January 24, 2020 implies a test level of 8420. Further, growth is expected to continue to the area above the level of 9160. The conservative buying area is located near the area of ​​8400. The breakdown of the cryptocurrency growth option will be the breakdown of the level of 8320. In this case, we should expect further fall.

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Billionaire investor advises people to stay away from Bitcoin

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  • Ray Dalio said that Bitcoin is too volatile to be a store of wealth, at present. Instead, he suggests a small allocation in gold.
  • He also noted that currently, “cash is trash” and that investors must look for a well-diversified portfolio.

The founder of investment firm Bridgewater Associates, Ray Dalio, has warned people not to get involved with speculative currencies like Bitcoin in 2020. Appearing on CNBC’s “Squawk Box” at the World Economic Forum in Davos, Switzerland, Dalio said:

There’s two purposes of money, a medium of exchange and a store hold of wealth, and Bitcoin is not effective in either of those cases now.

He believes that Bitcoin is too volatile to be a

store of wealth currently. Instead, he suggests a small allocation in gold. 

Because of the volatility, you can’t go next to it. Someday, you know, I would say Libra or something with more stable value has got more potential. But also, who is going to do the buying? Central bankers and others? What are they going to hold as reserves?

What has been tried and true? Are they going to hold digital Bitcoin? They are going to hold gold. That is a reserve currency, and it has been a reserve currency for 1,000 years… A bit of gold is a diversifier, and that’s the advice I can give.

He also noted that currently, “cash is trash” and that investors must look for a well-diversified portfolio. 

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Visa continues to dwarf Bitcoin in this important metric

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Despite optimistic predictions, Bitcoin still has a long way to go before it can compete with companies such as Visa. The fiat currency giant reported transaction volume of over $11.2 trillion in 2018, while Bitcoin network only managed to transact around $2.2 trillion until 2019.

Visa dominates all payment processors with $11 trillion transaction volume

While the crypto industry as a whole seems confident that digital assets will ultimately replace traditional fiat currencies, the reality is that there’s a long way to go before the two can even compete in the same category.

The growing transaction volume of most high-market cap cryptocurrencies definitely shows that major improvements are made. However, most of that growth fades away when compared to the big players in the payment processing industry.

According to its annual performance report, Visa saw a total transaction volume of just over $11.2 trillion. The volume is the sum of both the payment volume and cash volume, with the payment volume being the total monetary value of transactions on Visa-branded cards and payment products, the company explained in the report.

This is a huge increase from the $10.3 trillion the company reported in 2017 and an even bigger increase from the $8.1 trillion in total volume

reported in 2016.

Image showing total volume recorded by Visa in 2016, 2017, and 2018
Image showing total volume recorded by Visa in 2016, 2017, and 2018. (SourceVisa)

Bitcoin still has a long way to go to catch up with Visa

Bitcoin‘s numbers aren’t nearly as impressive as these. However, it’s worth noting that digital asset data can often be misleading and can never be taken at face value. As a Fidelity Digital Assets research put it, one of the most commonly overstated measures is Bitcoin’s transaction volume.

Most data providers use an unspent transaction output (UTXO) system, which doesn’t distinguish between economic and non-economic transactions. Because of that, the difference between the adjusted and unadjusted transaction value figures are often very significant.

According to the report, Bitcoin’s total adjusted transaction value from inception to Dec. 11, 2019, was approximately $2.2 trillion. It’s unadjusted transaction volume, however, stands at approximately $7.5 trillion.

Chart showing the difference between cumulative raw transaction value and the adjusted value
Chart showing the difference between cumulative raw transaction value and the adjusted value. (SourceCoinMetrics)

While the $2.2 trillion is a significant achievement for a system as young and as novel as Bitcoin is, it’s still a long way behind Visa. Bitcoin’s transaction volume was amassed over a period of more than 10 years, while Visa recorded its $11.2 trillion from September 2017 to September 2018.

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