Since the announcement earlier this week of a crackdown and prohibition by the United States government, the price of the Tornado Cash (TORN) token has dropped by over half of its value.
The value of one Tornado Cash token (TORN) dropped from around $31 to $16 when the news on the 8th of August made headlines throughout the world, including on the New York Times.
Your capital is at risk.
Why Was Tornado Cash Blacklisted?
The United States Treasury Department has placed the decentralized privacy solution on a “blacklist” due to allegations that it was used to wash $7 billion worth of Bitcoin that was stolen through scams and other forms of cybercrime. The amount of faith that investors have in the Tornado Cash platform is reflected in the value of the TORN cryptocurrency.
In addition, the Treasury Department has announced that it would be imposing sanctions on Tornado Cash, a virtual currency mixer that is responsible for laundering the proceeds of cybercrimes, including those conducted against victims in the United States.
Despite public pledges to the contrary, Tornado Cash has continually failed to implement appropriate controls aimed to prevent it from laundering cash for harmful cyber actors on a regular basis and without basic procedures to manage its dangers. These controls were designed to prevent Tornado Cash from engaging in money laundering.
They went on to say that this also includes over $455 million in virtual currency that was stolen by the Lazarus Group, which is a state-sponsored hacking group in the Democratic People’s Republic of Korea (DPRK) that was sanctioned by the United States in 2019.
This is known to be the largest theft of virtual currency to date. Tornado Cash was then used to launder more than $96 million worth of assets stolen by hostile cyber actors from the Harmony Bridge Heist that occurred on June 24, 2022, and at least $7.8 million worth of monies stolen from the Nomad Heist that occurred on August 2, 2022.
The Volatile Relation Between Circle and Tornado Cash
Circle the firm that is responsible for USD Coin, has banned all Ethereum addresses that are controlled by Tornado Cash. This means that USD Coin can no longer be utilized on Tornado Cash.
It is difficult to make a price prediction for Tornado Cash following a huge event like this one; therefore it’s possible that the influence of it has not yet been included in.
Investors that acted quickly to purchase the dip when Terra (LUNA) dropped 50% in the space of a few days lost a significant amount of additional money as the price continued to fall over 99.99%.
There is evidence to support both an optimistic and pessimistic outlook for Tornado Cash. There are others who believe that the continuing legality of cryptocurrencies would benefit from a ban on Tornado Cash as well as more government oversight of the industry.
Since Circle made that move, the total market capitalization of decentralized stablecoins has dramatically expanded, while investors have been divesting from centralized stablecoins like USDC.
Which Way Is Tornado Cash Tokens’ Price Headed?
It’s possible that a drop of 50% in such a short period of time might be the consequence of market inefficiencies and overreaction or “FUD” (fear, uncertainty, and doubt) as a result of the crackdown; as a result, purchasing TORN at this moment would be a wise investment decision.
Right now the market is speculative, there are 2 possibilities discussed below to get a better understanding of which signals indicate a Bull market and Bear market.
We will take a look at both the3 scenarios.
Bull Market Scenario
The Tornado Cash platform offers a one-of-a-kind application and service for users. Because its smart contracts break the on-chain link between recipient and destination addresses, it is impossible to track where funds are sent; there is no electronic paper trail.
This is accomplished through the utilization of zero knowledge proofs (zk-SNARKs), which are designed to protect users’ confidentiality.
It is a fact that the technology is utilized by criminals in order to conceal transactions and evade detection in the process of laundering illegally obtained monies.
For instance, when the Instagram account of the Bored Ape Yacht Club was hacked and NFT holders were subjected to phishing attacks by con artists.
On the other hand, as critics in the cryptocurrency industry have mentioned, the laundering of fiat cash by large institutions is a far more widespread practice.
Within the realm of cryptocurrencies, there are several individuals who advocate for privacy coins or tokens that are connected to anonymity.
Some cryptocurrency investors view that as inevitability from the perspective of fundamental analysis, which would indicate that TORN token is a solid purchase at the current time.
Bear Market Scenario
The story of privacy coins has been circulating for years, revolving around cryptocurrencies such as Monero (XMR) and ZCash (ZEC), but it has not yet realized.
The market can remain crazy for a longer period of time than you can remain solvent, which has resulted in significant losses for many investors who opted to purchase privacy coins.
The price of altcoins can remain in a downward trend for years; ZEC has had a significant decline since 2016. Even if it has a stronger price chart, as of August 2022, XMR is still trading at levels that were observed in the midst of the Bull Run in 2017.
Is The Timing Right To Invest In Tornado Cash?
It’s possible that TORN is in the middle of an accumulation cycle before it makes a move to the upside to take out some highs at around the $80 levels.
However, conservative investors would wait for TORN token to first recover to reclaim the $40 level and flip it as support before entering a position in the cryptocurrency.
If the Tornado Cash coin can achieve its positive market structure — macro greater highs and higher lows – then the TORN price projection will be improved.
The entire amount of TORN tokens is 10,000,000, however only 11% of those have been unlocked so far; the number of tokens now in circulation is 1.1 million. Token unlocking have the potential to drive down prices much lower.
One of the assets that is presently doing the best is the native token of a centralized platform called Binance Coin. It has outperformed the native currencies of DEX platforms such as UNI, CAKE, DEFC, and other similar platforms.
Binance, the primary marketplace where the TORN token is exchanged, has recently begun displaying risk warnings for its various TORN trading pairings.
The price of TRX vs. USDT on Binance touched its all-time low of $15.63 in June 2022, at a time when Bitcoin was trading for $17,600 and Ethereum was trading for less than $900. This week, TORN managed to avoid falling below that price, instead rebounding at $15.83.
Is There A Better Alternative Than To Invest In Tornado Cash?
Is it wise to put your money into Tornado Cash? It is impossible to determine until there has been more price activity, the markets have had time to respond to the recent FUD, and TORN has formed a new trading range.
Investing in a new cryptocurrency project during its presale period is a viable alternative to trading or keeping an asset such as Tornado Cash for an undetermined amount of time in the hope of a recovery.
Tamadoge, a high-utility meme coin that is also the rewards token of an impending play to earn crypto game, is one that was evaluated not too long ago by our team.
Even if this was the case with Solana, for the most part, the most spectacular bull runs in cryptocurrency are caused not by assets that have intriguing technology and uses in industry – although this was the case with Solana – but rather by meme cryptocurrencies that have popular appeal.
Due to the fear of missing out (FOMO), retail investors poured more money into Dogecoin and Shiba Inu than the rest of the cryptocurrency market in 2017.
People who would wonder “what is Tornado Cash” and not comprehend its utility will hit the market and purchase on a puppy cryptocurrency with hilarious memes.
This is also the explanation that billionaire Elon Musk stated during a recent visit on the Full Send podcast.
It is frequently more advantageous to speculate on a new cryptocurrency that is actively participating in a presale or initial coin offering (ICO) as opposed to trying to make a long term Tornado Cash price forecast based on the sluggish adoption of privacy tokens, for example.
Your capital is at risk.