On Tuesday (October 22), Bitcoin violently pulled back to $67,447, dipping as low as $69,519, with a maximum daily decline nearing $3,000. Billionaire Musk stated he has not been actively involved in cryptocurrency, avoided important discussions about blockchain, and Tesla has transferred all of its $765 million Bitcoin holdings to an unknown wallet. Cryptocurrency gateway company Transak disclosed a data breach affecting over 92,000 users in the European and American cryptocurrency circles. The Federal Reserve called for the U.S. government to either tax or ban Bitcoin to maintain the deficit.
Musk's important statement: Not actively involved in cryptocurrency
Musk responded to a question from the public at a campaign rally for former U.S. President Donald Trump in Pittsburgh, stating, 'I think cryptocurrency is an interesting and potentially valuable defense against centralized control.' At the time, an attendee asked Musk if XRP could be integrated into the financial system.
He further stated that the nature of cryptocurrency aids personal freedom and added that he does not endorse XRP or any other specific cryptocurrency.
Musk later stated that he 'is not actively involved in cryptocurrency' and avoided the question of whether blockchain (the underlying technology of Bitcoin and other cryptocurrencies) could be used in future elections to reduce or eliminate voter fraud.
Forbes reported that Musk was a key driver of the Bitcoin and cryptocurrency market boom during the COVID-19 pandemic, frequently posting about Bitcoin and cryptocurrencies, but recently turned his attention to criticizing U.S. spending and warned multiple times that America is on the brink of 'bankruptcy.'
Musk agreed to lead the so-called Department of Government Efficiency proposed by Trump, naming it D.O.G.E—this name is derived from a meme and is also the basis of Dogecoin (DOGE).
Last week, Musk suddenly transferred his remaining Bitcoins, causing panic in the Bitcoin price.
Marked as Tesla's crypto wallet, it recently transferred nearly all of the company's 11,500 Bitcoins.
According to Arkham Intelligence data, on October 15, that address conducted 26 transactions, including test transfers. Prior to this sudden transfer, Tesla's Bitcoin wallet had been idle since June 17, 2022.
The current situation remains unclear, with no signs that Bitcoin has been sent to cryptocurrency exchanges, and Tesla has not publicly disclosed any plans to sell its cryptocurrencies.
Transak suffers data breach, exposing information of 92,000 users
According to a blog post on Monday, Transak discovered that a malicious actor gained access to employee laptops through a phishing attack, allowing them to access 'specific user information stored on the vendor dashboard.'
Attackers stole employee credentials and successfully logged into the systems of a third-party 'Know Your Customer' (KYC) provider, which is used for document scanning and verification services. Sensitive information of 92,554 users (1.14% of Transak's user base) was leaked, including names, birth dates, passports, driver's licenses, and selfies.
Transak provides a fiat-to-cryptocurrency gateway, allowing users to buy and sell digital assets using fiat currency. It integrates directly with crypto wallets and decentralized applications (DApps) for transactions. The company offers non-custodial access for major crypto wallets and exchanges, such as Binance, MetaMask, and Coinbase.
According to Transak, no financial information was leaked during the attack: 'After a thorough investigation, we can confidently confirm that no financial sensitive information, including email addresses, phone numbers, passwords, credit card details, Social Security numbers, or any other financial data, was leaked in any way.'
Transak is contacting affected users, stating, 'If we did not send you an email, then you are not affected.' It added that data protection agencies in the UK and regulators in the EU and the U.S. have also been notified.
Another similar incident affected users of Fidelity Investments. This financial company is one of the issuers of cryptocurrency exchange-traded products (ETPs) and recently disclosed that personal information of over 77,000 customers was compromised between August 17 and August 19.
This incident marks the fourth data breach at Fidelity in the past 12 months, with the other three occurring on March 4, March 18, and July 19.
Federal Reserve: The U.S. government must 'ban Bitcoin' to maintain the deficit
A recent research report from the Minneapolis Fed suggested taxing or banning assets like Bitcoin to help the government maintain the deficit. In an economy like the U.S. that attempts to maintain a permanent deficit through nominal debt, the existence of Bitcoin poses challenges for policy implementation.
The Federal Reserve stated that Bitcoin introduces a 'balanced budget trap,' meaning the government is forced into an alternative state of balancing its budget.
Researchers believe that Bitcoin is a fixed-supply 'private sector security' with no real resource requirements. They concluded that Bitcoin should be banned or taxed to address this dilemma. 'A legal ban on Bitcoin could restore the unique implementation of a permanent fundamental deficit, and taxation on Bitcoin could also achieve this.'
A fundamental deficit occurs when government spending exceeds the taxes and other revenues it collects (excluding debt interest payments). The term 'permanent' is key to a fundamental deficit, as it implies that the government plans to maintain spending above revenue indefinitely.
The total U.S. national debt has reached $35.7 trillion. However, the primary deficit, the annual gap between spending and tax revenue, is currently around $1.8 trillion.
Reuters reported on October 19 that the largest driver of the FY2024 deficit (also the largest deficit outside the COVID-19 pandemic) is the rising interest rates and the increasing cost of financing debt, leading to a 29% increase in the interest cost of U.S. government debt, reaching $1.13 trillion.
Bitcoin Technical Analysis
FXEmpire analyst Ibrahim Ajibade stated that although there was a 3% intraday pullback, the technical indicators on Bitcoin's daily chart remain bullish. First, Bitcoin's 10-day moving average (MA) has crossed above the 20-day moving average, enhancing the optimistic outlook.
Historically, this crossover suggests that an upward trend may continue driven by strong buying interest. The 10-day moving average is currently at $66,700, closely related to the key psychological support level of $66,000. This support is crucial for maintaining a bullish outlook, as a drop below this area may trigger more evident downward pressure, targeting the 20-day moving average of $64,150.
Additionally, the Relative Strength Index (RSI) recently pulled back from overbought levels and is currently hovering around 59.98. While not excessively bearish, the recent 3% intraday adjustment may be a necessary flush of weak hands, clearing the way for a more sustained breakthrough of the $70,000 level.
Therefore, the RSI around 59.98 indicates that due to the initial adjustment, Bitcoin now has enough room to build strength and break the $70,000 level in the next attempt.
If this occurs, bulls may target $75,000 as the next major goal.
However, in the short term, the bull market must maintain a closing price above $66,000 to sustain positive momentum. BNB1357
