Bitcoin Price Analysis and Cyberattack Compromises 76Mil JPMorgan Accounts

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Cyber AttackThe Bitcoin price is descending in fits and starts as the bears try to wrestle it to new lows while buyers are entering at the lows. Global markets, however, are currently in a state of panic after stocks tumbled to new lows yesterday. Adding to the growing uncertainty about financial corporates, JPMorgan revealed that more than 76 million household accounts held with the investment bank have been compromised due to cyberattacks.

Update

Time of update: October 3, 2014 at 12:00 pm EST
Price had hit $360.00 (Bitstamp) and reversed. It’s difficult to see how the bears are going to negotiate additional lows without first allowing price to pull away to higher levels. Upon doing that, the bears run the risk of trade going above $400 and exploding to the upside. Another few dramatic lows may be in the pipeline, but as it stands, this decline looks close to being spent.

Gold has dropped below $1,200 and has been within $10 of the support floor at $1,180 from where it should bounce to upside to complete wave E of its 18 month barrier triangle chart formation. The Gold and Bitcoin prices seem correlated at the moment and may reverse trend around the same time.

Bitcoin Price Awaiting Action

Time of original analysis: October 3, 2014 at 7:00 am EST
Yesterday’s analysis, proposed two likely paths of price action. Red and blue paths are annotated on the 4-hour Bitstamp chart below. In the interim price has been trading mostly sideways, and it seems to be following the blue path of price action.

Bitstamp 4h chart 3Oct2014

The red path remains a possibility and once either path reacts in the low $300s we will assess the state of the decline again. Hopefully, today’s US session will progress trend and provide more clarity on whether we reverse above or below the $300 price level.

Summary

Traders and investors have to practice patience at this time. Bitcoin ordinarily finishes a decline low with a strong move. Don’t try to guess the bottom – either buy into the market systematically according to a plan or wait for confirmation that trend has changed to the upside and then buy into the rally on a pullback.

If your strategy is to buy into successive lows, remember that a potential low of $200 is possible, with downward trade spikes capable of dropping even lower.

Global Economic News

US – JPMorgan Accounts Compromised

Cyberattack Against JPMorgan Chase Affects 76 Million Households

The NY Times (link above) reports that until just a few weeks ago, JPMorgan’s executives said that only one million customer accounts had been affected by cyberattack during the middle of this year.

In a filing made to the SEC, yesterday 2 October, JPMorgan revealed that cyberattacks had compromised the accounts of 76 million households and seven million small businesses – a tally that makes the intrusion one of the biggest ever.

This catastrophe comes as a timely reminder that the critical vulnerability of banks lie in their centralization. Bitcoin’s decentralized blockchain and payment network cannot be compromised in this way. Web-based accounts with funds and credentials stored in a centralized typology will remain vulnerable to cyberattacks that use snooping, key-logging, brute force password cracking as well as existing vulnerabilities. This applies equally to centralized providers offering Bitcoin services. For all the hype and widespread use, Circle and most of the popular exchanges are vulnerable to the same kinds of attack that struck JPMorgan.

In an even stranger twist the attackers have not stolen any funds despite having the access and the means to do so.

The people with knowledge of the investigation said it would take months for the bank to swap out its programs and applications and renegotiate licensing deals with its technology suppliers, possibly giving the hackers time to mine the bank’s systems for unpatched, or undiscovered, vulnerabilities that would allow them re-entry into JPMorgan’s systems.

Experts at the bank say that it is “still unclear how hackers managed to gain such deep access.” Well, if they’d kept up to date via CCN they’d understand how the OpenSSL Heartbleed bug and Pony Trojan botnet can make such penetration possible.

Also read: OpenSSL Heartbleed Security Bug
Also read: Pony Trojan and its Botnet
Also read: Bitcoin Bank Circle Opens Its Doors

No forensic analysis of the alleged cyberattack has been made available to the public.

Also read: US Lawmakers Push Anti-Privacy Cyber Legislation After JPMorgan Attack/

Asia

USDJPY chart 3Oct2014In his address to Japanese parliament, Bank of Japan’s Governor Kuroda said that the BoJ is aiming for a 2% inflation target “as soon as possible”. Japan is applying unprecedented quantitative easing measures via Yen money-supply inflation. The BoJ’s objective is to devalue the Yen in order to make Japanese exports more attractive to battered consumer markets. The comprehensive outcome hoped for is that more exports and reflation will kick-start Japan’s ailing economy and create employment, consumption and pull the island nation out of decades of deflation.

Governor Kuroda said he is confident that CPI gains will be seen to speed up in the second half of 2014. He also remarked that a weak Yen won’t present problems “if it reflects fundamentals” and that a weak Yen is not a minus for Japan’s economy, overall.

What Kuroda says about the weakening Yen might be true for domestic Japan. However, he fails to mention that the cheaper Yen is a problem for Japan’s Asian neighbors – most of whom compete for the same export markets.

China’s economy is headed for its slowest year of growth since 1990. In response to the falling Yen, China will be forced to weaken the Yuan to keep its exports competitive. This, in turn, will impact China’s neighbors, as well as the developed economies that are in the throes of long-standing financial crisis. At the end of the domino rally are the emerging markets – some of whom are China’s BRICS partners.

So, a close watch needs to be kept on the state of Japan’s economy. The desired outcomes of “Abenomics” are not materializing and Japan’s leadership are trying to produce them by speeding up their quantitative easing project, instead of abandoning it. Besides being engaged in economic warfare with its regional competitors, Japan’s government and central bank are apparently hell-bent on being economic kamakaze – because if their plan fails they’ll be crashing Japan into the rest of the world.

Economic Data

  • 12h30 Canada Trade balance
    • expected: 1.5B (previous: 2.2B)
    • actual: -0.6B
  • 12h30 US Non-Farm Employment Change
    • expected: 216K (previous: 180K)
    • actual: 248K
  • 12h30 US Trade balance
    • expected: -41.0B (previous: -40.3B)
    • actual: -40.1B
  • 12h30 US Unemployment Rate
    • expected: 6.1% (previous: 6.1%)
    • actual: 5.9%

[divider]CCN[/divider]

CCN hosts a summarized Economic Calendar showing the week’s main data releases.

Readers can follow Bitcoin price analysis updates each weekday on CCN. In-depth analysis articles are published every Sunday.

Disclaimer

The writer is fully invested in Bitcoin via BTC-e and Bitfinex. Trade and Investment is risky but not as risky as some other things out there. Take care only to take action in the market when you are 100% sure of the outcome. CCN accepts no liability whatsoever for losses incurred as a result of anything written in this Bitcoin price analysis report.

Bitcoin price charts from TradingView.
Images from Shutterstock.

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Market analyst and Open source developer with a keen interest in blockchain technology, consensus mechanisms and the decentralizing effect. He has found a solution to the PKI mechanism. Email me to discuss.