Round 1 goes to... Bitcoin!
Over the weekend, Bitcoin Cash and Bitcoin went to war. This was an all-out act of aggression on the part of Bitcoin Cash against Bitcoin. Following the Segwit2X debacle and the collapse of Bitcoin Classic a few days ago, all efforts and resources were poured into pumping up the value of Bitcoin Cash against the rest of the crypto market. While it was intended to destabilize Bitcoin (and it did somewhat), the real casualties were the innocent bystanders - all other coins.
The attack was coordinated and nearly instantaneous. Over the course of about three hours, Bitcoin Cash stormed upwards in value, blasting from around $1500 USD and reaching about $2600 USD average global value on exchanges. At times, the average value was changing by more than $50 every few seconds.
How did this happen? Is this just speculation on the market? Supply and demand? Traders deciding that Bitcoin Cash is the "real" Bitcoin?
Definitely not.
Observe the chart:
Volume and buying patterns during this attack were anything but natural market forces at work. Large hands, driven by Roger Ver and Jihan Wu, simultaneously created a deluge of fiat and alt-coin assets pouring into Bitcoin Cash. Bitcoin dropped a bit in value - about 15% - a significant amount, but nowhere near relative to the 300% increase in Bitcoin Cash value. Suddenly, as can be observed in the chart, at around 6:00 GMT, the massive resources of the pump had been exhausted, and the value of Bitcoin Cash immediately cratered.
This is not normal buying and selling market forces at work. This was a concerted, coordinated, and timed attack.
In this battle, Bitcoin was bent, but not broken. Yes, it did lose a bit of value as weak hands jumped aboard the Bitcoin Cash train, soon to lose any meteoric gains, but it remained relatively stable and retained much of its value. Alt coins collectively lost a ton of value during the battle, as money was concentrated into the behemoths of the market. It may take longer for them to recover.
But Round 2 could be on its way. Battered and bruised, Bitcoin will need to withstand another attack. Bitcoin Gold will release today, and the big hands may use this to their advantage. If they pour their fiat into Bitcoin Gold, this could result in a similar situation to what we saw yesterday. Or, they could instead pour their Bitcoin Gold holdings into Bitcoin Cash. Either way, this could further promote uncertainty and instability on the market.
Today could be a great day to stock up on Bitcoin before it recovers. Even better, many alt coin projects are at bargain-basement prices right now. This could be the perfect time to increase your holdings.
Hang on, it could get crazy!
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*This is not professional trading advice. Spend only what you can afford to lose!
image sources:
https://www.worldcoinindex.com/coin/bitcoincash
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I agree this was not a natural uptrend with supply and demand. Going up this fast feels very wrong. Feels very coordinated.
I hate the fact that any coin can just come in and have the name Bitcoin. Even if i hate patent there should be some sort of trademark in place to protect the name. This whole thing is bad for the market and new people. Outside of a small group of people who are into the technical detail and know the differences like block size, miner debate, who is behind each coin and ideology , normal users will not really know what they are buying.
I really hope BTC can win this fight. Even if BCH is a decent crypto i don't like the fighting and problem it causes the community.
On the other hand BTC does have a huge problem with scalability. Like yesterday it took 17 hour to get my first confirmation sending from one exchange to Coinbase. And sadly not every company using segwit don't help specially with fees.
I neglected to mention this in the article, but you bring up another important point: transaction fees and network overload. I believe this is primarily because of malicious spam attacks on the Bitcoin mempool, causing a backlog of transactions and a spike in transaction costs. This is basically when empty transactions are sent en masse through the Bitcoin network, bogging down the system dramatically.
It's very much like the old days when one might have fallen victim to an email spam attack, receiving thousands of empty emails, causing an inability to process any real emails. The average user becomes frustrated and learns that Bitcoin is unable to handle larger transaction volumes when, in reality, much of that increase in volume is artificial.
It has happened often in the past and is a tried and true attack method. This time it was coordinated along with the other elements I mentioned in the article.
I might add it's possible for this to go both ways: Bitcoin Cash might also get spammed.
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STOPAn interesting side-note: During a portion of the BCH sell-off, the largest Korean crypto exchange, Bithumb, was down for about an hour. This likely contributed to the panic in the market. Will we see another surge tonight?
Here comes the next pump!