Bitcoin Split is the New QE

The 1^st August Bitcoin fork event was a long time coming with talks of Armageddon doing its rounds in the Cryptoworld as the tussle between the Bitcoin mining cartel and Bitcoin’s core developers hit fever pitch.

We saw the evolution of Bitcoin Cash resulting in Bitcoin Cash running alongside Bitcoin and the moves since the 1^st August have been somewhat telling of where the support lies for now.

Bitcoin looks to have taken over the Dow as the record breaker in the markets, with Bitcoin hitting above $3,500 levels for the first time on Tuesday, as Bitcoin’s market cap moves towards $60bn. That’s quite a move from July 17^th’s $1,910.74, Bitcoin having slumped in anticipation of the fork event and uncertainty over what lay ahead.

In contrast, Bitcoin Cash has had mixed fortunes, with prior to the fork event futures having been at sub-$300 levels, to peak at $690.38 on 2^nd August before retreating in quick fashion back down to $313.11 in just a matter of hours, with Bitcoin Cash sitting at $330.49 at the time of the report.

Current valuations for Bitcoin Cash are likely to be overvalued, largely as a result of many exchanges being unwilling to accept Bitcoin Cash deposits and issues faced in the efficiency of the Bitcoin Cash blockchain, where current transaction times are said to be averaging 60 minutes, with talks of no blocks being created for more than 10 hours on occasion.

The slow transaction times are certainly pinning back the pace at which Bitcoin Cash can be sold on the exchanges that do accept deposits, the bottleneck continuing to provide support for Bitcoin Cash valuations.

Bitcoin holders certainly had the choice on which way to go, with Bitcoin holders also receiving Bitcoin Cash on a separate block chain, but with the talk of more than 70% of Bitcoin Cash coins waiting to be sold on the participating exchanges, it looks a little grim for now.

It’s too early to completely write-off Bitcoin Cash however, with the basis of development being to increase capacity in order to offer an alternative that would not be expected to face the congestion issues faced by Bitcoin, where Bitcoin’s core developers are unwilling to allow the blocksize to increase as the number of transactions increased alongside the number of miners.

One may see the current issues faced by the Bitcoin Cash blockchain as somewhat ironic as the transactions being significantly outpaced by Bitcoin and this does justify concerns raised by Bitcoin’s core developers on the fact that there had just not been sufficient testing.

Talks are for Bitcoin Cash to slide to sub-$200 levels and perhaps even further and if the estimates on the volume of Bitcoins waiting to be sold are correct, selling pressure alone will inevitably weigh heavily on prices, though blockchain efficiency will need to see significant improvement before the floodgates open.

The reality is that Bitcoin Cash was created from nothing and the values ascribed are certainly not justifiable, with the evolution of Bitcoin Cash being likened to QE programs used by central banks to save economies from self-destruction, the capital used by central banks coming almost, if not, from thin air.

While Bitcoin looks to have maintained its position of strength within the Cryptoworld, there has been talk of Bitcoin manipulation, which has been attributed to the surge in Bitcoin’s value to record levels in the wake of the Bitcoin fork event last week.

Spoofy might be illegal, but not in the Cryptoworld

A group of traders, known to the Cryptoworld as Spoofy, have been accused of spoofing Bitcoin on the Bitfinex cryptocurrency exchange, according to Cointelegraph.

Spoofing is the placing of a buy or a sell order with the intention of cancelling the order before execution, which has the ability to move Bitcoin’s value on the basis of a large order coming in or a large number of Bitcoins being sold, supply and demand driving valuations, a particularly large buy order capable of driving Bitcoin’s value significantly higher.

A lack of regulation in the Cryptoworld makes it easy for manipulators with deep pockets to line their pockets at the expense of others. The knowledge of a large order coming in driving others to place buy orders on the assumption that there will be strong gains on the order confirmation.

Such market manipulation in developed markets are illegal and ultimately result in jail time, but not in the Cryptoworld…

Spoofy is alleged to have such deep pockets that $50m orders and above are not uncommon. While the Cryptoworld may be suggesting that Bitcoin Cash is overvalued and ready for a tumble, any introduction of regulation against spoofing may also deliver a similar blow to Bitcoin, with Spoofy’s apparent ability to move Bitcoin in any direction desired likely to be lost and a sizeable investment with it.

There’s a long way to go and until Bitcoin Cash’s blockchain works at the efficiencies widely publicised ahead of the 1^st August Bitcoin fork event and there’s no real telling whether there will be increased demand for Bitcoin Cash. Yet, one thing is certain, transaction speeds will need to be significantly faster than Bitcoin’s 10 minute mark and a much larger number of Bitcoin exchanges will need to accept Bitcoin Cash, which may ultimately be the telling blow as exchanges dig their heels in for now.