- OKEx lost contact with one of the private keys holders leading to the suspension of withdrawals.
- UniSwap rallies amid debate on how DEXs offer better services than centralized exchanges.
The cryptocurrency industry has been treated to an unusual occurrence on Friday after OKEx, a leading exchange, suspended withdrawals. The event shook the entire market, led by Bitcoin's drop from $11,500 to $11,200.
Major altcoins such as Ethereum, Ripple and Bitcoin Cash plunged only to find support at $365, $0.24 and $250 in that order. The market is yet to recover from the shock, while many analysts believe that more declines are in the offing.
On the contrary, UniSwap (UNI), the native token of the decentralized exchange, UniSwap experienced an unexpected price jump following the OKEx withdrawal suspension news. Meanwhile, UNI is doddering at $3.23, following an incredible spike from levels slightly above $2.8.
OKEx in the spotlight after suspending withdrawals
Towards the end of the Asian session on Friday, OKEx announced the suspension "of digital assets/cryptocurrencies." One of the holders of the exchange's private keys "is currently cooperating with a public bureau," in a continuing investigation. OKEx claims that they have not been in contact with the private key holder; hence, "the associated authorization could not be completed."
The exchange assured customers that apart from the withdrawal of digital assets/cryptocurrencies, all other operations remain functional. The withdrawals will commence "immediately once the concerned private key holder is able to authorize the transaction."
Why decentralized exchanges could be the solution
Decentralized exchanges, commonly known as DEXs, allow selling and buying of digital assets but never take custody of the funds. In other words, funds are transferred from one user wallet to another. Smart contracts are utilized in the execution of trades. In other words, the user is always in control of their funds. On the contrary, centralized exchanges such as OKEx take custody of the funds, just like a typical bank will do.
Whereas the centralized exchanges ensure the safety of their customers' funds, DEXs have no control over this. In addition to providing custodial services, centralized exchanges must ensure that withdrawals are made timely.
Decentralized exchanges like UniSwap are hardly victims of hack attacks because they do not store large volumes of funds like centralized exchanges. Hacking attacks are common in centralized exchanges. For instance, Bitstamp was hacked in 2015, Japan-based Coincheck exchange suffered a massive attack in 2018 and the defunct Mt.Gox exchange was also hacked twice in 2011 and 2014, among other cases.
As mentioned earlier, users on DEXs have full control over their funds and do not need to wait for the platforms' withdrawals. Instances of centralized exchanges freezing withdrawals are not new. Besides, the OKEx announcement on Friday told customers that "pursuant to 8.1 Service Change and Interruption of the Terms of Service, OKEx may change the Service and/or may also interrupt, suspend or terminate the service at any time with or without prior notice."
UniSwap triumphs in the mayhem
The rally witnessed in UniSwap highlights the need for a paradigm shift in how exchanges handle customer funds. Users would like to control their money as it gives them peace of mind and control. The OKEx suspension of withdrawals highlights the value of decentralized exchanges like UniSwap, as reflected by the remarkable price movement.
UniSwap boost is running out of steam
The incredible price action following the communication from OKEx hit a barrier formed by a confluence of the 100 Simple Moving Average (SMA) and 200 SMA. However, a bullish divergence of the Relative Strength Index (RSI) shows that buyers still have the upper hand. If bulls can flip the confluence into support, UNI may resume the uptrend to $3.8. Unfortunately, buying pressure is diminishing.
UNI/USD hourly chart
On the downside, the 50 SMA is holding as immediate support. Bulls must defend this zone to avert a potential reversal. Meanwhile, crucial support lies at $2.8 in addition to the significant anchor at $2.5.
Looking at IntoTheBlock's IOMAP model, challenging resistance levels lie ahead. The zone between $3.3 and $3.4 comes out as the most robust seller congestion area. Here, roughly 3,300 addresses previously bought around 32.5 million UNI.
On the flip side, the dwindling support shows that UNI could soon retreat to the levels before the OKEx news. The primary support lies from $3.1 to $3.2, where 156 addresses bought approximately 13.5 million UNI.
UNI IOMAP chart
Looking at the other side of the fence
It is worth mentioning that if the confluence resistance at the 100 SMA and 200 SMA is overcome, UNI/USD could keep the uptrend intact. The RSI shows that buyers are relatively in control only that they lack the power to push above $3.3. Moreover, if terrible news continues coming out of OKEx, investors will continue giving DEXs attention, which will boost UNI to levels past $3.8.
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