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The year has started with a bang! 

Stocks and cryptos are rallying strongly so far yet volatility is still really high.

This afternoon, we’ll have a special webcast at 3:00 PM GMT to discuss some of the main themes going into 2019 and how to position your portfolio.

This session is open to everyone and we’ll be honored if you can join us.

Feel free to register now at this link.

@MatiGreenspan

eToro, Senior Market Analyst

Shutdown: Day 18

Volatility Still Elevated

Ethereum Classic Hacked!!

Please note: All data, figures & graphs are valid as of January 8th. All trading carries risk. Only risk capital you can afford to lose.

Stocks have managed to rally off the lows and are now firmly in green for the year. Here we can see the Dow Jones’ all-time high in early October and the recent low from December.

There does seem to be some progress being made in the US trade war with China. The Fed also seems to be signaling that they’re less likely to be hiking rates this year. In contrast, the US government shutdown only seems to be heating up.

Today marks the 18th day of the partial shutdown and according to rhetoric from the White House, it seems that the President is willing to let it last an entire year if necessary.

President Trump has announced that he will address the nation tonight at 9:00 PM EST. Many expect him to declare a state of emergency in order to circumvent Congress in getting funding for the border wall.

Market volatility has come down a bit from the extreme highs of December but is still quite elevated.

So, there’s been a lot of confusion here and I’m very glad to cut right through this one for you and clarify.

First, some background… We’ve discussed already that the Ethereum blockchain is about to see a major upgrade. The name of this upgrade is Constantinople and it is scheduled for on or around January 16th.

Constantinople will be implemented as a hard fork on Ethereum. If you’re not 100% sure how forks work, please review this short explanation now.

In this upcoming case, the Ethereum upgrade has been widely embraced by the community and until now there have been no major players protesting Constantinople. So most likely it will be a smooth upgrade. This means that the entire network will probably implement the upgrade together and there will be no action required from the end users.

It’s important that we emphasize this because there are several projects out there piggybacking on the upgrade and taking advantage of people. One of which, called Ethereum Nowa appears to be an outright scam.

Not to be confused with Ethereum, Ethereum Classic is a legitimate fork of Ethereum. A disagreement among the community back in 2016 led to a chain split. Since then Ethereum Classic (ETC) has not done too well, especially when compared to her sister Ethereum (ETH).

Last night Coinbase put out the following alert on Ethereum Classic.

TL;DR: Etherum classic has been hacked!!

Explanation: The most common type of attack in crypto is known as a 51% attack. Basically, if a foul player manages to control more than half of the network’s mining power (hashrate), they can basically rewrite history.

Lingo: Rewriting history is also known as a reorganization or “reorg” and the most common reason to do this would be to create a double spend. Or, erase a previous transaction so you can get your coins back and spend them again.

Coinbase’s blog identified no less than 15 reorgs, several of which contained suspicion of double spend activity amounting to an approximated $1.1 million, which has been siphoned from the network.

Again, it’s important to understand that ETC is not the same as ETH. In the initial moments after the blog was released, both coins sold off in the confusion but ETH did manage to regain composure fairly quickly.

The reason is that Ethereum has a hashrate of about 20 times that of Ethereum Classic. So while it might be possible to temporarily get enough hashrate to control 51% of ETC’s network, it would be practically implausible to affect ETH in this way.

Putting things into perspective, if someone is dreaming about trying to 51% attack Bitcoin, they would need about 4,500 times the amount of hash than they do to attack ETC.

So, anyone claiming crypto is in a state of emergency is dead wrong on this one. Simply put, this is yet another great example of how negative news is nothing more than a learning opportunity. All the newcomers that joined crypto in 2017 should be much more comfortable now with how blockchain and crypto works and that is ultimately a good thing.

Have an amazing day ahead. Hope to see you at the webcast.

This content is provided for information and educational purposes only and should not be considered to be investment advice or recommendation.

Past performance is not an indication of future results. All trading involves risk; only risk capital you are prepared to lose.

The outlook presented is a personal opinion of the analyst and does not represent an official position of eToro.

eToro is a multi-asset platform which offers both investing in stocks and cryptocurrencies, as well as trading CFD assets. 

Please note that CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 65% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

Cryptocurrencies can widely fluctuate in prices and are not appropriate for all investors. Trading cryptocurrencies is not supervised by any EU regulatory framework. 

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