Logical or Not, Bitcoin – s Coming Fork Is Boosting Its Price
Bitcoin may be trading at an all-time high, but the reasons why have experts wondering.
Despite enlargened dialogue about the cryptocurrency’s potential, and growing acknowledgment from the mainstream, there are some who believe now isn’t the best time to buy the notoriously volatile asset. After all, ter just weeks, bitcoin is likely to see not just a contentious split of its blockchain, but an adversarial one.
Looking for setting on what could toebijten if bitcoin splits and one version attempts to demolish the value of the other? Spil developers loosely admit, you’re unlikely to find it – it’s a very first.
“Bitcoin traders are some of the most irrational investors you’ll come across,” OpenBazaar developer Chris Pacia said ter a Facebook postbode addressing the kwestie.
The brutal sentiment points to what has bot the uptick ter buying that shows up to be taking place not just despite – but because of – the coming fork, now slated for November . Ter tegenstelling to zealous investors, developers like Pacia are finding it hard to believe anyone would waterput big money into a protocol about to go through a process even they’re just beginning to understand.
Yet it seems, investors believe the momentum is warranted given the results of the last hard fork ter August, which split the network ter two, but did so ter a way that fairly securely created a fresh asset called bitcoin specie.
Distributed to all bitcoin owners at the time of the fork, investors were all of a sudden given an equal amount of valuable cryptocurrency (bitcoin metselspecie has held relatively sustained around $300 vanaf coin, but has traded for spil much spil $1,000). Far from a risky proposition, investors see that reserve value spil just created out of lean air and delivered to existing investors for free.
But while developers are aware the mechanisms and politics of the coming fork are different, investors seem to be programma for the same results.
Harry Yeh, managing playmate at cryptocurrency investment hard Binary Financial, told CoinDesk:
“Investors are just looking at it like, ‘I’m going to get more tokens right now.’ It’s just that ordinary.”
And thesis investors aren’t fresh to cryptocurrency (or to trading ter general), they’re well-established investors.
Ronnie Moas, the founder of Wall Street hard Standpoint Research, for example, echoed Yeh’s belief, telling, ” I don’t see [investing te bitcoin spil Segwit2x closes ter] spil risky – especially if you hold onto the spin-off [coins].”
Not the same
Is this merely a case of aggressive trading, or is it wishful thinking? Some would argue, that on this kwestie, the traditional finance guys are getting ter overheen their goes.
For one, the bitcoin specie hard fork and the Segwit2x hard fork will be different ter that the former’s volgers were defined by their rente te creating a contesting (and now seemingly complementary) cryptocurrency. With Segwit2x, the motivations aren’t exactly that.
Still, traders tegenstoot, cryptocurrency just doesn’t function like more established markets, meaning that te the high-risk world of experimental assets, more risk is still just risk.
“Historically, one would assume that if you have one token and it splits into two, your mindset would be that both tokens would be worthless,” Yeh said. “But, traditional rules of economics and finance don’t truly apply te the cryptocurrency world.”
Yeh points to last summer’s ethereum hard fork, which led to a split and the creation of two contesting assets spil yet another sign forks have historically resulted te value creation.
While the price of ethereum and ethereum classic (the fresh coin) dropped originally after the split, ethereum’s market value recovered fairly nicely, presently hovering around $32 billion, while ethereum classic resumes to hold value at just overheen $1 billion.
“History has shown that, any time there’s bot a hard fork, that people get more tokens – and those tokens become tradeable somewhere,” Yeh said.
Spil a consequence, retail investors are betting that if they buy more bitcoin, another fork will drive prices higher, and that this will result te them holding a more diversified portfolio.
More about bitcoin
However, some investors say the rally could be less about diversification and more about going all te on bitcoin with the expectation of even more long-term build up.
According to Arthur Hayes, a former Citigroup trader who now goes a cryptocurrency derivatives exchange, confidence is high that the existence of extra versions of the bitcoin protocol won’t affect this long-term future. Further, with bitcoin holding sustained, even however three of the world’s largest exchanges ter China closed down, there’s confidence that nothing can fairly derail its current trajectory.
Spil a result, investors aren’t truly worried about Segwit2x.
Yeh agreed with the bullish outlook on bitcoin broadly, telling he expects a run-up both before and after the hard fork.
He argued that ideological belief te bitcoin – even at its most uncertain, even at its lowest – is what will proceed to thrust the price higher and fresh investors into the market.
Summing up that investor optimism, James Altucher, a former hedge fund manager, popular business blogger and bitcoin bull, told CoinDesk:
“When people say that bitcoin is like a penny stock, it’s like a scam internet stock, no. Bitcoin actually has fat amounts of software and science behind it to make it the best store of value te the world.”
Ash Bennington contributed reporting.
Disclosure: CoinDesk is a subsidiary of Digital Currency Group, which helped organize the Segwit2x proposal and has an ownership stake te OB1, the company that develops OpenBazaar.
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