MOSCOW, November 14 – RIA Novosti, Natalya Dembinskaya. Back in August, the most popular and expensive cryptocurrency in the world, Bitcoin, was divided into two: Bitcoin Classic and Bitcoin Cash. It was decided to do this in order to optimize the system for mass users. Just the other day, the rate of classic Bitcoin fell by almost 30%, and Bitcoin Cash, on the contrary, rose in price by 35%, reaching $2,426 on Sunday. Soon, Bitcoin began to win back the fall, and the “cash” corrected slightly. However, the developers of Bitcoin Classic have not ruled out the possibility that by May 2018 it will cease to exist, and Bitcoin Cash will become the main currency. What is the reason for the upcoming redistribution of the cryptocurrency market, whether to expect a grandiose collapse in the exchange rate and whether this will bring the collapse of the Bitcoin bubble closer - in the material of RIA Novosti.
What happened
Bitcoin Classic crashed by $600 to $6,720 on Saturday in just a few hours. In general, in two days the cryptocurrency fell in price by a thousand dollars, although on the evening of November 8 it reached another historical high of 7880. This happened after the organizers of the SegWit2X hard fork abandoned their plans.
The second Bitcoin split, SegWit2X, was scheduled for November 16 - another Bitcoin was supposed to appear, which, as expected, would become the main one. Key market participants and miners agreed with this. But, as observers explain, as Day X approached, concerns arose in the community that this might be an attempt on the part of a number of large companies to make Bitcoin “their own.”
“Speculatively minded traders began to buy bitcoins so that by November 16 they would have twice as many of them. And due to the fact that the division was canceled, these people began to sell bitcoins and buy Bitcoin Cash,” explains Alexey Bragin, technical director of the exchange Safello, Board Member of Blockchain Community.
"IN Bitcoin Cash There are some differences from regular Bitcoin that make it more convenient to use: for example, it provides twice as fast confirmation money transfers", says Alexey Bragin.
“In addition, investors are looking where it is more profitable, and the cancellation of SegWit2X expectedly increased the demand for Bitcoin Cash, since mining it temporarily became more profitable than classic Bitcoin,” adds Alexander Borodich, founder of the Universa blockchain.
Thus, now Bitcoin Cash is experiencing mainly speculative growth - this is due to the feverish interest in this currency and the influx of new investors who are driving up its price. But if Bitcoin Cash continues to grow for four to five months and begins to overtake classic Bitcoin both in capitalization and technology, this will be a precedent for the cryptocurrency market, and classic Bitcoin will inevitably begin to fall in price.
Will the collapse be big?
According to Bragin, we are not talking about the fact that one cryptocurrency will completely drown the other - rather, they will be able to coexist.
“Now the Bitcoin rate has fallen almost as much as the Bitcoin Cash rate has risen, which indicates that they are a complementary pair,” the analyst notes.
However, according to him, Bitcoin Classic does not have a clear level of support: it all depends on market sentiment and expectations. For example, a month ago it seemed that three thousand dollars per Bitcoin was expensive, and in 2011 it seemed that three dollars per Bitcoin was expensive. Thus, the rate of classic Bitcoin, if Bitcoin Cash becomes the main currency, may collapse to one hundred dollars.
“Investors whose portfolio consists of one hundred percent bitcoins will, of course, lose money. A smart investor diversifies his portfolio, as with any investment,” notes Vadim Valeev, CEO of the Crypto Invest platform.
Observers are still inclined to believe that a fall in the rate of classic Bitcoin below a thousand dollars is unlikely - this was a very important psychological level for the cryptocurrency.
When the bubble bursts
In the near future, there will not be a sharp drop in the Bitcoin rate to minimum levels; the cost may vary within five thousand dollars and above, and when the “bitcoin cash fever” passes, the rate may go up again, says the founder of the Universa blockchain.
In his opinion, the current situation is not a harbinger of the collapse of the bubble. Bitcoin Cash will not be able to replace classic Bitcoin until it at least demonstrates stable capitalization: first the currency overtook Ethereum, then there was a sharp decline. At the same time, the cost of regular Bitcoin returns to its positions after the collapse.
“We expect that the currency will continue to strengthen and could rise to nine thousand dollars in the coming months,” predicts Borodich.
Experts point out that the latest fall in Bitcoin Classic is within the ascending channel, which began back in April, and the cryptocurrency fell to the lower limit of its growth channel. Thus, if Bitcoin falls below 5500, it will probably fall further.
“Just like in the case of the dot-com boom, up to some level everyone thought that this was the way it should be, and then it became obvious to everyone that it was a bubble. So now, if Bitcoin Cash proves its worth and becomes the main currency, then its rate will rise, and the bitcoin rate will fall. How much is up to the market to decide," Bragin explained.
For people outside the complex and exciting world of cryptocurrencies, Bitcoin is difficult to understand. Many of them brushed it off for years, saying it was a fad that would disappear as quickly as Papillon chocolates. However, the other day this cryptocurrency crossed the threshold of $11,000 per unit, and skeptics spoke differently. Beginners are urgently investing in Bitcoin, hoping that the price will rise.
Many old school investors would simply say that this is an economic bubble that is about to burst. But the reasons why Bitcoin will be a bubble in the long term go much deeper. As with any other speculative asset, no one knows what will happen to it in the future. There is an opinion that Bitcoin will not survive, and it is supported by many reasons. Let's take ten to begin with.
Blockchain is more important than Bitcoin
The most valuable thing about Bitcoin is that it introduced blockchain technology to the world. It greatly improves the speed, privacy and security of sending money. Bitcoin can be sent from one person to another without an intermediary, and the identity of each participant in the chain will be encrypted into a long string of letters and numbers called a “wallet.” Blockchain is power. Its potential to change the world rivals that of the Internet. On this moment Blockchain is young and young, but anyone who gets to know this technology better becomes obsessed, like a prospector in the Wild West.
However, despite the fact that Bitcoin was the first currency to introduce blockchain to the world, blockchain can easily exist without it. If one page on the Internet goes down, the Internet will not cease to exist. Most people have never seen the first website they created. It was a blank white page called the World Wide Web with a list of text links. No one could have imagined that this completely nondescript page would turn our world into the one we see today. Improved and more quick versions blockchains are already coming into this world, making improvements to the original Bitcoin, flowing into individual cryptocurrencies like Ethereum and Ripple. There are already many cryptocurrencies on the market that are based on ever-improving blockchain technology.
Big Brother is watching
One of the biggest advantages of Bitcoin is that it is supposed to be private, secure and unhackable. And of course, this will benefit criminals on the dark web. Cryptocurrency gained a terrible reputation once it was used to anonymously transfer money while buying drugs on Silk Road.
In addition, many see Bitcoin as a way to evade taxes, which is also a crime in many countries around the world. In 2013, 44% of Bitcoin was owned by people who identified themselves as libertarians. Today there are many newcomers to the market, so the percentage of libertarians is smaller. People invest in cryptocurrency in hopes of getting rich, not in hopes of contributing to a revolution.
What ordinary Bitcoin users don't understand is that even though their names are protected by a chain of numbers and letters, this does not guarantee them complete anonymity. Most Bitcoin exchanges, like Coinbase, require new users to upload photos or even a passport. In response, the exchange directly states that it will store information about the user’s name, address, and telephone number for up to five years and will provide them at the request of the authorities, if necessary.
The FBI has made it clear that it is closely monitoring the development of Bitcoin, which means the identities of people who use cryptocurrency for illegal activities will gradually become clearer. Of course, not everyone who uses Bitcoin is a criminal. In addition, hackers already know that they need to hide their ends in the water. For the most part only ordinary users You shouldn't expect any privacy from Bitcoin. For now, cash remains the only way to remain incognito.
Lack of leadership
Bitcoin was created by a mysterious man, Satoshi Nakamoto. Although there are various legends about his true identity, some convincing, others not, no one knows exactly who he is. When starting the Bitcoin project, Satoshi supported the coders who created the platform whenever they had a question. But when investigative agencies around the world began searching for him, he suddenly disappeared. Possible “Satoshis” were visited all over the world. But despite the best efforts of law enforcement, his true identity still remains a mystery.
Now coders and miners (those who mine Bitcoins) will have to come to a consensus every time a decision has to be made about the future of Bitcoin. Unfortunately, the community cannot agree on even the smallest decisions. There is no roadmap for Bitcoin's future development. The Reddit community has already split into two separate groups because they can't agree.
Other cryptocurrencies actually have executives who run them. Vitalik Buterin is the creator of Ethereum. Brad Garlinghouse from Harvard is the CEO of Ripple. Buterin and Garlinghouse met with central banks and the Federal Reserve in October 2017, but no one came from Bitcoin because there was no one.
Laws and regulations
In October 2017, China stated that it was illegal to create an ICO (Initial Coin Offering). Startups have been exploring how they could use blockchain to create their own coins to raise funds. The only downside was that many of these coins were simply fraudulent. Several companies permanently took millions of dollars from desperate people who tried to invest in ICOs in hopes of getting rich.
In New York, all companies that want to accept Bitcoin must obtain a BitLicense to operate. This license promises to comply with US tax laws and regulations. The application costs $5,000. Most companies simply think it's not worth the money and time.
In 2014, the IRS issued guidance stating that anyone who profits from digital currency must pay taxes in the same way that anyone who sells their stocks or bonds must pay taxes. If the Bitcoin revolutionaries stick to their morals, they won't listen to the IRS. When it smells like tax evasion, law enforcement is right there.
Use Cases
Many small businesses in California's Silicon Valley accept Bitcoin as payment, but large companies still only accept cash and cards. Unless large companies use Bitcoin to buy and sell stuff, it is unlikely that the cryptocurrency will have widespread use, because blockchain technology itself can exist without Bitcoin. Many experts believe that blockchain can actually help the financial system, but it needs to see more successful use cases first.
At the moment, the only digital currency that works with the Federal backup system USA, is the property of Ripple. Currency developers have proven that they can work with large corporations, banks and other companies. They're even going to process American Express financial transactions. Ripple's own currency is called XRP.
In October 2017, Bill Gates announced that he had chosen Ripple for his project, which helps eradicate poverty in third world countries, although he had previously advocated Bitcoin.
Problems with time and mining
The longer Bitcoin exists, the more difficult it becomes to “mine”, that is, to create new coins. Without miners, the Bitcoin network will collapse. The barrier to entry into mining is already too high for the average person, because giant warehouses in China are mining huge volumes of Bitcoin. In most countries, the cost of electricity needed to mine bitcoins will be higher than the cost of the digital currency, making it pointless to even try to extract it.
The longer Bitcoin exists, the more time it takes computers to process information. The official Bitcoin transfer time is “one hour,” but anyone who works with this cryptocurrency knows that this is far from true. Transactions can take up to six hours because the system processes about 15 transactions per second. There is no guarantee that this will be fixed. Quite the opposite.
In contrast, cryptocurrencies are being created that can process 1,500 transactions per second and ensure that the infrastructures and technologies behind them never slow down. In the digital age, people want everything to happen instantly, so slowing down blockchain is simply unacceptable. The faster the cryptocurrency, the better.
Fear, uncertainty, doubt
The current Bitcoin market is extremely volatile. If Bitcoin is discussed in the news, its price may fluctuate within hundreds of dollars for several hours. Fear, uncertainty and doubt crop up all too often in the mining community. If they have even the slightest hint that bitcoins could become illegal, that they could be hacked, infected with a virus, or otherwise damage the system, the price would drop catastrophically because people would panic and want to sell as much of it as possible.
If the Great Depression and recession of 2008 taught us anything, it is that people will not hesitate to sell Bitcoin if they lose faith in it. Without any clear idea of where Bitcoin is heading, investors cannot count on anything or believe in anything. Many people have been rewarded for investing early in cue ball, but the future is too uncertain.
Will real Bitcoin straighten its shoulders?
Since Bitcoin creator Satoshi Nakamoto no longer publishes his opinions, all that's left for coders is his documentation. One person may read one paragraph in the Bitcoin White Paper one way, another another, and there will be no one to clarify the interpretation. Many believe that for Bitcoin to survive, there must be a mass exodus to another platform that is more reliable and faster.
The developers developed a solution called a hard fork, thanks to which the Bitcoin Cash cryptocurrency was created. However, everyone understood that it could have its own problems, so a backup plan was also created for another hard fork called Bitcoin Gold. This plan, known as SegWit2x, was eventually canceled, leading to another sharp increase in the price of the original Bitcoin.
As of 2017, the number of Bitcoins owned by Satoshi Nakamoto is worth billions of dollars, and he has made it clear that he is done with the project. Perhaps he is already relaxing on a private island while coders argue about which crypt to call the “real” Bitcoin.
1% hate Bitcoin
Billionaire Jamie Dimon, CEO of JP Morgan, called Bitcoin a scam and believes that the currency will inevitably collapse. He said that even if the price of one bitcoin rises to $100,000, his opinion will remain unchanged.
Every year in Toronto there is a banking conference called SIBOS (Swift International Banking Operations Seminar), where the most powerful people in the world meet. The event is held big company SWIFT. She is responsible for bank transfers around the world. An individual bank moves billions of dollars every year. Almost all banks in the world use a slightly outdated SWIFT technology, which handles quadrillions of dollars.
At SIBOS, held in October 2017, SWIFT CEO Gottfried Leibbrandt said in an interview that the company is trying to create technology that will improve security, anonymity and speed. If you read between the lines, it becomes clear that Gottfried is talking about developing his own blockchain. However, he said it will take more than a year to actually launch his technology. Ripple was so confident that it could beat SWIFT that it deliberately scheduled its own SWELL conference at the same time and place as SIBOS. This skirmish led to the successful acquisition of hundreds of new banking partners willing to use Ripple's technology. And this 1% will not risk adopting Bitcoin.
End of the world
Bitcoin's most ardent supporters are revolutionaries. Some are hoping that people will stand up and choose Bitcoin over traditional banks. Michael Lewey, author of Moneyball, even got excited about talking to Bitcoin revolutionaries in Silicon Valley because it could serve good material for another book. He watched as revolutionaries literally smoked marijuana and discussed ideas for the future, so he decided that Bitcoin was doomed to fail. He also changed his mind about writing a book.
For these revolutionaries to get what they want - that people will lose faith in banks and switch to Bitcoin - the economy of our world must collapse. If this happens, people will lose their homes, jobs and possibly their lives. There are very few active revolutionaries willing to make such sacrifices.
As an Anonymous representative told Vice News, many members of the organization are leaving, filled with mistrust. Others make false promises and do not follow through with their revolutionary plans. And if even a large organization like Anonymous could collapse, what would stop Bitcoin from suffering the same fate?
So, even today, seven days after the start, the Bitcoin exchange rate continues to fall and, as a consequence, all other alcoins (by the way, Ethereum fell by almost 20% per unit).
Why did the decline continue?
Why such a big drop? Yes, everything is banally simple and connected with supply and demand, naturally, after the spring boom, a huge number of people entered mining and mine exclusively for sale.
The following scheme occurs on the exchange, the number of people wanting to sell cryptocurrencies exceeds the number of people wanting to buy them, that is, demand exceeds supply, as a result, a situation arises with rates and futures orders (so-called orders), according to which the number of people wants to buy or sell in the future a number of cryptocurrencies for a smaller price increases.
The price, like a snowball, begins to decrease at first at a lower speed, then, as we see in 2017, the rate of decline simply increases to the speed of sound, and orders go lower and lower and some miners or traders want to take the cryptocurrency at any available price, so as not to lose part of your profit. This is actually the whole reason for the rise and fall of Bitcoin.
What to do during a cryptocurrency crisis?
- Never sell during a panic, when the rates have already noticeably depreciated, because you will only go to a loss, and there is a chance of a rollback of the rate; in any case, you still have an asset in your hands that with a high degree of probability can grow. Let us recall that before the spring of 2017, Ethereum had been falling for more than nine months.
- If you still sold at too low a price, then you shouldn’t bite yourself, because the drop could have been tenfold? So you made the right choice in this situation.
- Always keep 30% of your assets in Bitcoin. For what? Yes, for stock market speculation, you see Zcash has fallen further, but without bitcoin reserves, you will not be able to buy at favorable price and when he rises to sell. Plus, the more different coins you have in your portfolio, the greater the chance that one of them will fire.
- When a pump occurs, for example five times, of some currency (in which you invested), do not rush to sell everything at once, take 60-70% interest, this will already be more than the amount you invested plus a small profit. Why is that? It’s simple: if the currency starts to fall, you won’t lose anything and will remain in the black, but if the currency starts to grow even more, profit is waiting for you.
When will Bitcoin and Ethereum rise again?
First of all, you need to look at the exchange, the fewer orders there are to sell cryptocurrencies, and more to buy (fewer people want to sell and more want to buy), the price will increase, as buyers will increase their rates.
Of course, there has not been and cannot be an accurate forecast; most likely this will not happen earlier than in six months, when random people and alarmists will leave mining and at first the market will begin to stagnate, only then will a noticeable increase in the rate begin, so we are waiting for January-February 2018.
But of course, the increase depends on many factors and a big drop could actually be an excellent buying opportunity and it is quite possible that Bitcoin will roll back, thus falling by 20-30% per share. But it’s up to you to decide, most likely in the coming days the drawdown of the cue ball will continue, but as we see, every fall is followed by an even greater increase.
Surely every investor in the cryptocurrency market is wondering whether Bitcoin will fall again, or whether it has already reached its bottom.
Well-known virtual currency market trader Ran NeuNer believes that Bitcoin may fall even lower.
When Bitcoin drops to around $5,000 (barring some turn of events), we may see a very different mining game.
Bitcoin fell below $7,000 on Sunday. At the time of writing, the cryptocurrency leader was valued at $6,771.
What are the reasons for such a sharp decline?
Over the weekend, a virtual currency exchange in South Korea announced that it had been hacked.
NeuNer is not surprised by this. After all, the Bitcoin market is in its infancy.
People are constantly talking about different hacking attacks on online platforms. This is to be expected from an industry that has a market capitalization of $300 billion. And we expect the industry to be a $20 trillion industry one day.”
Cryptocurrency has fallen. And according to NeuNer, what's happening in the crypto space right now is most likely a bear market.
We cannot break out of this downward pattern. Bitcoin is not yet able to break the $8000-8500 level, the expert said.
Wait for the coin to fall
Despite this, the market pioneer is confident that now is the time to invest in Bitcoin.
If you believe in the long-term survival of blockchain technology.
Traders who make money from daily digital currency fluctuations are looking for quick profits. If crypto falls again, they'd better find their luck in other sectors. But investors who invest in long-term assets (three to five years) are simply obliged to buy and hold Bitcoin.
The virtual coin can grow up to $50,000. Then no one will be interested in whether you bought it for 5 thousand or 6 thousand dollars.
Even though Bitcoin has fallen, there are investors who remain optimistic about the cryptocurrency market. Such investors include Tim Draper, founder of Draper Fisher Jurvetson.
He recently explained what he expects the price of Bitcoin to do in the future.
I hold a lot of virtual currencies in my portfolio and mostly bitcoin. The rate has fallen, but I'm buying more. Because I’m sure crypto coins are promising. Fiat is the past. I'm looking forward to going to the store and shopping with Bitcoin.
The expert expects the current global currency market to grow to approximately $140 trillion in the next 10 years. The share of fiat money will fall. There will be growth thanks to cryptocurrencies. Their amount will be as much as 100 trillion. Bitcoin will provide about 10% of this market, or $10 trillion. Other coins will grow and surprise us.
Tim Draper is confident that Bitcoin is heading higher. We will see crypto skyrocket to $250,000 by 2022.
Do you agree with the predictions of the famous investor? Write about it in the comments to the article.
Today you can increasingly hear: “Bitcoin is a bubble”, “Bitcoin is a pyramid”, “naive hamsters will be punished”, etc. Let’s try to figure out how much more the world’s main cryptocurrency can grow, is Bitcoin really a bubble, and can the price for it will collapse significantly.
Crazy records
Even housewives are now interested in Bitcoin, which indicates the popularity of the product, since it is already recognizable among the masses. According to a popular stock exchange saying, when a shoemaker starts talking about the price of a particular stock, it should be sold. However, with cryptocurrencies things are a little different.
Soon, leading American exchanges will introduce futures and options trading on Bitcoin, which will add even more popularity to the coin. As a result, investments in cryptocurrency will be an order of magnitude greater than now. What happens when serious money goes into some asset?
That's right, the price continues to rise. Therefore, the information background for Bitcoin remains extremely positive, and its price will most likely continue to rise.
Thus, according to the most popular American exchange Coinbase, due to the constant growth in the number of new users, by March 2018 it is planned to expand the service department 16 times compared to January 2017. Also next year, changes will be made to the telephone support: it will become 24 hours a day, seven days a week. According to a recent report by Cointelegraph, the number of users of the exchange reaches 125,000 per day.
The most optimistic forecasts gave a figure of $10,000 per 1 bitcoin by the New Year, but just yesterday the bitcoin rate exceeded 16 thousand dollars.
Positive vs negative
What negative aspects could affect the rate of the main cryptocurrency today?
First of all, there is a total ban on its circulation, initiated by the governments of various countries.
However, following the example of some states, it can be stated that these bans have only a temporary effect on the exchange rate, then it is restored and goes even higher.
Moreover, the governments of some countries are already issuing their own cryptocurrencies, for example, just the other day, the President of Venezuela Nicolas Maduro. In connection with the economic crisis and hyperinflation of the Venezuelan bolivar, the President of the Republic announced the introduction of a cryptocurrency, which will be backed by commodity reserves, including oil.
The decision was announced on the government's official website. According to the president, such a step will help overcome the financial blockade and strengthen monetary sovereignty.
The new authorities of Zimbabwe, which is drowning in an economic crisis, are also offered to create a national cryptocurrency.
Negative aspects include competition between forks (different branches) of Bitcoin. Thus, the appearance of Bitcoin Cash caused a lot of panic, which pushed down the rate.
The other day there was news that by the end of December the Bitcoin network will be replenished with several more hard forks!
First up will be Lightning Bitcoin from an independent team of developers who promise that the coin will combine the best of Bitcoin and Ethereum. Further:
In short, the end of the year promises to be truly unpredictable for Bitcoin. However, there is no reason to say that this, in the opinion of many, crypto-pyramid will collapse like the MMM pyramid. From a global perspective, it is unlikely to face a collapse; rather, the worst that can await the most famous cryptocurrency is local corrections and stagnation.