How the Contentious Bitcoin Cash Hard Fork Impacted Bitcoin Prices
As though 2018 has not been bad enough, this week has occasioned a significant plunge in Bitcoin Cash prices.
BTC prices went down14 percent last week marking printing 2018 lows. Currently, the prices of about $4,000 mean that all the gains from the wild rally from September 2017 have effectively been wiped out.
Bitcoin has been on a downward trend in the past few weeks. Needless to say, this plunge came after a period of relative stability for the pioneer cryptocurrency. This period through most of October saw stable prices at a time when global markets like the Dow Jones were in turmoil. The prices at the time were around $6,400. As it stands now, this downturn means that the cumulative losses for the year are north of 75 percent.
Bitcoin is susceptible to market trends but the recent fall is a result of more than just external factors. The regulatory measures implemented by the Securities and Exchange Commission (SEC) are a notable development.
Technical Issues and Lessons Learnt From Bitcoin Cash Hard Fork
Many will see the downturn in Bitcoin prices as a confidence crisis or one to do with external factors exclusively. However, anyone who follows Bitcoin keenly will note the technical issues that come up time and again.
Notably, one that will be the focus of this article is the BCH hard fork.
Naturally, this fork has had significant implications. The effect on hash rate power has destabilized Bitcoin mining difficulty which has certainly had an effect on Bitcoin prices. Certainly, this display of a lack of consensus and instability does not help at all.
The hash wars made market participants apprehensive and cautious. The dip in BTC prices has a trickle effect on smaller coins. BTC is arguably as crucial to cryptocurrency total market capitalization as the USA and Europe are to the world economy. Should BTC cough, all the other coins catch a cold.
Hash wars led to even greater price drops. The Bitcoin Cash SV and ABC communities tried to remedy these using measures like rented hash but these cost money and they couldn’t liquidate thanks to the fragile market, dropping BTC markets and thin orders. That said, the cost of safeguarding will increase and a faction may have to liquidate BCH causing further market drops.
Consequently, going forward the community should approach any fork going forward cautiously to maintain stability. In case of events like these, the community will better handle qualms preventing panic sells, FUDs, and unnecessary liquidation. As we have already seen, although inevitable in public chains, hard forks can have a detrimental result over and above the decentralization ideal as chest thumping champions would claim.