Bitcoin along with other crypto currencies lost around €42 billion in value over the weekend after the the Coinrail exchange was hacked. Crypto-related stocks also fell.
Eric Lam, reporter for Bloomberg News said: “Not surprisingly the details are still being unclear about what exactly what is happening.
“They have confirmed that there has been a cyber intrusion which some people might call it a hack.
“They haven’t given us exactly what that means but they have said that at the moment they have about 70 percent of their cryptocurrency holdings in a cold wallet.
“Basically that means that the addresses, or the data, around the cryptocurrency holdings in the exchange are being held in a computer that is off the internet.
“It keeps hackers from getting in them again.
“The other 30 percent or so, they were saying that they were the cryptocurrencies that were affected and of that about two thirds have been even frozen or covered.
“So there is about 10 percent left that has been potentially stolen.”
As of 9am on Monday, Bitcoin was at $6790.78, a drop of 11 percent since the same time on Friday.
Mr Lam added: “It is not the first time that a Korean exchange has been hacked. The biggest dollar one was Japan in January that was Coincheck. This is not the first one.
“We have seen a few crypto-related stocks moving in South Korean and Japanese exchanges this morning.
“A couple of companies in South Korea that have stakes in bithumb are down about 4 per cent today.”
The news of suspected heist triggered a wave of selling amid thin liquidity over the weekend, said Stephen Innes, head of Asia Pacific trading at Oanda Corp.
He told Bloomberg: “This is ‘If it can happen to A, it can happen to B and it can happen to C,’ then people panic because someone is selling.”
“The markets are so thinly traded, primarily by retail accounts, that these guys can get really scared out of positions.”
“It actually doesn’t take a lot of money to move the market significantly.”
Coinrail trades more than 50 cryptocurrencies and was among the world’s Top 100 most active venues, with a 24-hour volume of about $2.65 million, according to data compiled by Coinmarketcap.com before news of the hack.
Enthusiasm for virtual currencies has waned partly due to a string of cyber heists, including the nearly $500 million theft from Japanese exchange Coincheck Inc. in late January.
Cryptocurrencies have also faced criticism by banks and finance experts, with billionaire Bill Gates telling CNBC he would bet against the bitcoin and short it if he could.
The Microsoft co-founder said: “As an asset class, you're not producing anything and so you shouldn't expect it to go up. It's kind of a pure 'greater fool theory' type of investment.”