Is this the start of the flippening? Kurt recently wrote a piece about the Bitcoin Cash Hard Fork. Now, we’re in the midst of the Bitcoin Cash Fork ourselves. The hard fork is a process that the world’s fourth-largest blockchain by market capitalization undergoes every 6 months. It went off without a hitch in May, but now, there’s a very deep divide over the cryptocurrency’s technical direction.
Previous forks have been supported by the masses by Bitcoin Cash developers and miners. But now, there are two rival versions of Bitcoin Cash that is being offered for its future: Bitcoin ABC and Bitcoin SV.
This is significant for those who own or trade BCH because if neither side has majority backing, then BCH will undergo a split into separate blockchains, each with its own cryptocurrency. This raises questions for investors and potentially brings opportunities into play. Let’s go over them together.
One way to begin to assess your position is to look at how other traders are responding to this fork. From Nov. 2-6th, the price of Bitcoin Cash surged 49% to reach a 2 month high. This corresponded with announcements from Binance and Coinbase that they would support the upcoming hard fork.
Cryptocurrency trader Josh Rager described the 49% increase in BCH’s price as unusual when compared to the general market. He then suggested that the price rise was in direct response to the hype surrounding the fork. Rager said: “With current price action of BCH, it’s 100% related to the fork and support from exchanges. No other major cryptocurrency is seeing a notable price change.”
As an aside, a technicaly analyst would argue that even though all known information is already reflected in the price of an asset, therefore, the sudden rise of BCH could technically be foreseen. A trader by the handle “Crypto Rand” did, in fact, suspect BCH was due for a big move. The reason for the move remains to be seen, however, the catalyst seems to be the fork.
“Definitely, the move was pushed by the news but not only because of it. Technical analysis wise, it was also looking interesting. The current range proved solid for a long time having some good accumulation over there,” he said.
Many notable cryptocurrency exchanges have announced support for the fork. A few have even launched futures contract-like trading for future blockchains that could be created as a result of the split. The most well-known example is Poloniex.
Poloniex’s ‘pre-fork trading’ has been live since Nov 8th, but will close later today. The prices of BCHABC and BCHSV are narrow close – favor towards a particular fork is not as one-sided as many first thought. While this could be seen as a genuine way to gauge support for the fork, there’s good reason to believe that casual trader interest is limited. When asked on a poll done by CoinDesk, a combined 76% of the 2,669 voters answered they either plan to “wait and see” or are simply “not interested.”
What are the pros doing? Well. Historically, looking at the price performance of past forks like zclassic or bitcoin private and their 90+% declines, there’s merit in using caution when considering holding onto a forked coin long term.
A trader going by the tag “Credible Crypto” sates: “Most are in this for a quick profit and are not aiming to hold the newly forked coin for price appreciation. Those that sell first will win, the rest will be left behind.”
Another trader, Nick Cote, offered some of his advice as well: “I wouldn’t be buying here. Buying in hope of something is a sure way to lose money over the long-term.”
What do you think? Have you traded in ABC or SV? Are you holding BCH? What’s your move/strategy? Let us know on our Facebook page!
