After the massive price increases of the last few days, Bitcoin had to lose a lot of market capitalisation in the last few hours. The Bitcoin price is currently quoted at 16,900 US dollars – a minus of around 12%. Bitcoin’s market capitalisation slipped from its highest level on 17 December from 336 billion US dollars to 280 billion US dollars today. At the same time, the Bitcoin descendants, Bitcoin Cash (BCH) and Bitcoin Gold (BTG), respectively Forkcoins, were able to massively increase in value. What is behind these movements?
Looking at coinmarketcap, it is noticeable that the Bitcoin-Forkcoins are the biggest winners in the top 10 of the last hours. Bitcoin Cash ranks third with a clear lead over Ripple with a plus of over 50 % – current exchange rate: 3,500 US dollars. Considering that Bitcoin itself was trading at the same level in September of this year, this increase is more than impressive. But also Bitcoin Gold is above the expectations of many investors with a plus of 30 % and a price of 430 US dollars.
There are many reasons for this Bitcoin news
Expensive and lengthy transactions
As has so often been noted, the Bitcoin news ecosystem is barely able to cope with the massive increase in Bitcoin demand. This results in high transaction fees and long transaction waiting times. After all, Bitcoin can only execute a maximum of 7 transactions per second (theoretical value), so that the mempools are overloaded when the transactions are collected for confirmation. In order for a transaction to be processed quickly, enormous additional fees have to be paid by the user. For smaller amounts, for example, the transaction fees may exceed the purchase amount. A situation that has a negative impact on the Bitcoin news rate, even if solutions (Lightning Network) are in sight. Bitcoin Cash and Bitcoin Gold are, at least currently, in a much better position in this respect, so that they can benefit from the scaling problems as Bitcoin alternatives.
Futures are so-called futures contracts with which you can bet on rising as well as falling prices. This financial product class was recently introduced on the largest futures exchange in Chicago for Bitcoin. Accordingly, not only long positions, but also short positions could be built up, which push on the Bitcoin price. This is an option that does not exist for other crypto currencies and frightens some Bitcoin holders.
Bitcoin’s high mining difficulty often makes Bitcoin Cash and Bitcoin Gold relatively more attractive. After all, the crypto currency that is most economical or promises the highest return is mined. As a result, Forkcoins can benefit time and again from miners switching to them because their mining difficulty allows higher returns than Bitcoin – the price of Bitcoin Cash and Bitcoin Gold leaves them grateful to the detriment of Bitcoin.
Service Provider Acceptance and Technical Alternative
More and more merchants and wallet providers are accepting Bitcoin-Forkcoins, first and foremost Bitcoin Cash. The world’s largest Bitcoin payment provider, Bitpay, has announced that it will also accept Bitcoin Cash. The lower transaction costs or lower scaling problems compared to the Bitcoin primary rock could fuel further adoption by Bitcoin service providers. In addition, there are many supporters of Bitcoin Cash’s alternative approaches.
Uncertain market behavior and profit taking
In addition to the factual arguments presented above, there are always price impulses that are based on the market behaviour of the participants. It can therefore be assumed that larger Bitcoin holders have sold parts of their Bitcoin positions. It is difficult to determine whether these larger sales are the result of a pure profit taking intention or of a clear negative attitude towards Bitcoin. Experience has shown that, in the context of massive volatility, price corrections of minus 13% should not be overestimated, as is the case with Bitcoin – just as price increases of 50% should not be overestimated, as is the case with Bitcoin Cash.