Is Bitcoin's price about to fall after the fork?

In the last few weeks, we saw a relief rally in Bitcoin's price when the community reached a consensus to implement Segwit and avoid a hard fork. We then heard that a fork was going to occur anyways since a group intended to introduce "bitcoin cash" in any event.

When the bitcoin cash fork became more widely known, many industry players had expected that the bitcoin price would have dived due to the FUD (fear, uncertainty and doubt) that the fork created. However, instead, the opposite happened - bitcoin's price has went up and has seemed to draw users from all of the other coins. The price of most other coins seems to have been falling in anticipation of the fork.

The reason for the increased investment in bitcoin appears to be that people are aware that, up until one minute before the fork, their investment will see them receive one bitcoin and one bcc, whereas purchasing one minute after the fork will not. One minute after the fork, investors will have to choose whether to buy one bitcoin, one bcc or both separately and for individual prices. Users appear to be buying into bitcoin in anticipation of the fork in order to get both coins automatically at the time of the fork. It is always possible that this isn't the reason, but it certainly appears to me to be the reason.

Whether this pile-in into Bitcoin will turn out to have been a prescient move, or simply a dangerous siren song remains to be seen.

On the one hand, bitcoin cash has already received some acceptance from major exchanges and wallets and has a theoretical value attached to it in the futures market (although it is probably best not to attach too much weight to the futures price given relatively thin volume and the ever-present possibility of manipulation as a form of marketing). That being said, bitcoin cash has received almost unprecedented media attention for a new coin and most bitcoin users will suddenly hold the coin - there may well be considerable value that attaches to it now or at some later date and getting them "for free" before the split may be the cheapest valuation that you will see.

On the other hand, those in the know, will tell you that you are not really getting something "extra" with the bitcoin cash coins, you are simply being made whole when a piece of the network branches off. As an aside, one might argue that bitcoin cash would have been better off to hold an ICO and receive tens, or even hundreds, of millions of dollars to help them in their battle, rather than starting with users who hold their coins, but with a barren war chest.

In any event, August 1 will see all of the people who piled into the bitcoin network receive their bitcoins and bitcoin cash coins. Will all of those people remain within the system as of August 1? Or, a better question is, will all of those users WANT to remain in the system. Those that do want to exit may find the exits as crowded as a freeway that has 2 lanes blocked and this could well see the prices reduce much like the speedometers of the cars on that proverbial freeway.

Consider that many systems and exchanges are halting trading for bitcoin as of August 1 due to the issues with the network and to allow for stability to take hold. Shapeshift is apparently taking their system off line, Coinbase and other exchanges will suspend trading, there are warnings about making any bitcoin trades in the immediate aftermath, and there may well be some bitcoin legacy supporters looking to tank the bcc price and vice versa.

With all of this occurring, there may be limited options for people to get out of bitcoin and so the options that are available may see more sell orders than they normally would. When there are more sell orders than usual, prices drop.

It is also likely that anyone who wanted to get onto the "good ship bitcoin" would have done so before the fork to "get their free coins" and so there may well be less people looking to buy bitcoin in the aftermath of the fork, and perhaps some who will be more attracted to the young new and exciting "miss cash" and jump into her convertible, rather than the old bitcoin station wagon. There may also be a growing number of people who are eyeing Ethereum at under $200, or some of the other coins that have reduced in value. Many people may also, at that point, remember that segwit 2x is not a certainty and there is potentially more turbulence ahead on the road to November.

When you have an increased number of sellers and a likely reduction in the number of buyers, prices typically drop. When the exits are restricted, things can get worse. This is not to say that Bitcoin WILL go down in price, but, in my view, there are many factual sign-posts that suggest that it will. Of course, crypto-currency has proven very difficult to predict and so the exact opposite may end up happening.

The question then of course becomes, do you hold your bitcoin, your bitcoin cash, or both? I am not qualified to give advice, and I will typically turn to the sage minds for guidance and note the advice below: