Market Analysis

Cryptos Fall Ahead of the Chain-Split Fork

from Trust Nodes 5 years ago 0 0 656

Nearly all cryptos are down today with the global market cap nearing a fall below $200 billion on somewhat normal trading volumes of $14 billion.

All of the top cryptos are down by about 5%, with BCH seeing the biggest drop out of the main ones at close to 10%, while BTC has fallen by only 1.5%.

The reason is probably because of the upcoming BCH fork which has already led to some considerable volatility in BCHABC and BSV futures.

As can be seen, BSV went up from about $50 to $250 while ABC fell from about $500 to a low of $225.

Anyone who has BCH gets both coins, but instead of this trading fight leading to a price rise, it has for now led to a price fall.

That may be because futures are limited due to arbitrage through the BCH spot price. ABC and BSV, therefore, can only gain at the expense of the other.

Once the two coins do split and their spot price is listed, then the price gain of one wouldn’t necessarily have to be at the expense of the other.

What we may have seen therefore is some people converting their coins to BCH, so leading to a price fall for those other cryptos, but rather than this leading to a price rise for BCH, that has fallen the most.

That’s perhaps because some would have gone into fiat. The uncertainty regarding the chain-split may have led many to not take a position yet, so holding off until tomorrow.

Now what happens tomorrow is anyone’s guess, but around 5PM London time there will be two coins. It is probable in our view that will be that as far as the protocol is concerned. There have been claims of 51% attacks, but we don’t buy it and even if there is an attempt it would probably be just temporary.

Once the split has occurred you’d think exchanges would be racing to list, with the race in this case probably being between Poloniex and Bitfinex, Binance so seemingly staying out of the game for now, although that may change.

You’d think exchanges could instantly list the two coins, without allowing deposits or withdrawals, as they’re sort of just IoUs.

That means trading might begin tomorrow, but the real action is probably on the 16th, with a stress test on November 17th, and with it then continuing for another week or at most two.

Then the show is sort of over. BSV goes off to irrelevance, BCH gets on with their digital cash plans, the whole world enjoys Christmas, and then attention turns to eth’s issuance reduction fork in January.

That will be followed by the Proof of Stake (PoS) Beacon chain launch perhaps in March. Then BCH might have its halving maybe even this summer. Then BTC has its halving when 2020 is no longer so far.

For now, it’s BCH’s show and a price fall ahead of the split was perhaps to be expected, but what happens next remains to be seen.