Bitcoin Battered Below $2000, Ether Tumbles As August 1st Scaling Deadline Looms

Tyler Durden's picture

It's another ugly day in cryptocurrency land. As anxiety over the looming 'civil war' deadline of August 1st grows, so it appears the entire virtual currency space is being derisked, with Bitcoin down over 10% today (below $2000) and Ether down 6% (at around $175).

As Bloomberg reports, it’s time for bitcoin traders to batten down the hatches.

The notoriously volatile cryptocurrency, whose 160 percent surge this year has captivated everyone from Wall Street bankers to Chinese grandmothers, could be headed for one of its most turbulent stretches yet.

 

Blame the bitcoin civil war. After two years of largely behind-the-scenes bickering, rival factions of computer whizzes who play key roles in bitcoin’s upkeep are poised to adopt two competing software updates at the end of the month. That has raised the possibility that bitcoin will split in two, an unprecedented event that would send shockwaves through the $41 billion market.

 

While both sides have big incentives to reach a consensus, bitcoin’s lack of a central authority has made compromise difficult. Even professional traders who’ve followed the dispute’s twists and turns aren’t sure how it will all pan out. Their advice: brace for volatility and be ready to act fast once a clear outcome emerges.

 

“It’s a high-stakes game of chicken,” said Arthur Hayes, a former market maker at Citigroup Inc. who now runs BitMEX, a bitcoin derivatives venue in Hong Kong. “If you’re a trader, there’s a lot of uncertainty as to what happens. Once there’s a definitive signal about what will be done, the price could move very quickly.”

Once again it is the so-called 'civil war' that is weighing on the entire virtual currency space as we noted previously, behind the conflict is an ideological split about bitcoin's rightful identity...

Bitcoin is back below $2000 - two month lows...

As CoinTelegraph reports, the knock-on effects for altcoins in the top 10 were as palpable as ever, with Ethereum, Litecoin and others following Bitcoin downhill.

Ethereum has fared particularly badly over the past week, with monthly losses to its market cap now nearly $18 bln.

As always, internal reactions with cryptocurrency were mixed, some despairing while others are eyeing a keen buying opportunity.

While a general consensus points to the upcoming hard fork probability as the principal motivation for market uncertainty, mainstream media have been quick to sound the alarm about Bitcoin once again.

 

“Rival factions of computer whizzes who play key roles in Bitcoin’s upkeep are poised to adopt two competing software updates at the end of the month,” Bloomberg reported Friday, announcing Bitcoin could be “nearing a total meltdown.”

 

“That has raised the possibility that Bitcoin will split in two, an unprecedented event that would send shockwaves through the $41 bln market.”

As areminder, below is an outline of the main events that could unify or divide bitcoin:

By July 21: SegWit2x software is released and supporters begin using it.

July 21 to July 31: The community monitors how many miners deploy SegWit2x:

If more than 80 percent deploy it consistently, that should signal community-wide adoption of SegWit and the avoidance of a split, at least for now.

 

But if a majority do not deploy, expect anxiety within the community to grow as the focus shifts to the Aug. 1 deadline.

Aug. 1: UASF is deployed by its supporters, who begin checking if bitcoin transactions are compliant with SegWit.

If a majority of miners still do not deploy SegWit2x or otherwise accept SegWit, and if UASF supporters do not back down, then two versions of bitcoin’s blockchain could come into existence: a UASF-backed one where only SegWit transactions are recognized, and another where all trades -- SegWit and non-SegWit -- are recognized.

 

If a split occurs, bitcoin will likely begin existing on both blockchains in parallel, resulting in two versions of the cryptocurrency. Expect traders to quickly re-price the value of both, likely leading to massive volatility.

“It’s moderates versus extremists,” said Atlanta-based Stephen Pair, chief executive officer of BitPay, one of the world’s largest bitcoin wallets. “It depends on how much a person values the majority of people staying on one chain at least for a little while longer, versus splitting and allowing each pursuing their own vision for scaling.”

As a reminder, investing legend Michgael Novogratz recently noted, that he’s looking to add more ether if it falls between $200 and $150... and more bitcoin if it falls to $2,000.

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DjangoCat's picture

What goes up must come down.  Cryptos are a traders wet dream for the time being.

Jim Sampson's picture

I hate it when I have to get new software updates on my Phyz... wait... I never do that!

FX223's picture

Just checked on my stacks...all there...all good!  Now fuck it I'm going to the range.

BaBaBouy's picture

Digging up the Bitcoinz from the Rose Garden...

Jubal Early's picture

Civil war in crypto-land.  The swindlers against the hucksters.  Both of them are very slow and loaded with bugs.

Manthong's picture

 

I am going to buy a few of them once they are back around  a C note.

For those who have not been paying attention…

The bankers are trying to  F Btc with their paper.

Crypto is better than two lips, but .gov and the banker scum will have their say soon.

When the flak subsides the market will abide.

Until then.. well,  I just bought another $100 face “Junk” 90% Ag

Yukon Cornholius's picture

I still have the same bitcoins I had before the surge...and now it looks likely that i'll have 2x the bitcoin in a couple of weeks. The price in USD is irrelevant

Manthong's picture

Omigosh…

I went to horrible frate yesterday…….

Actually,, these guys are upping their game,, the stuff I buy there is pretty darn good.

But.. butt the nice young amply sized girl did a courtesy and although my coupon was expired, she took my phone and got a coupon code which got me the free LED flashlight I wanted,

For those of you who are seasoned enough to recall Johnny Carson……

He did a schtick that posed a text teen (back when phones had real buttons) against a Morse Code oldie.

Well, the Morse code guy beat the teen hands down.

This would not work today.

The young lady at HF blasted the text with the edges of her thumbs at OC speed.

 

MalteseFalcon's picture

I thought "Satoshi" set the code and walked off.

Can anyone tinker with the code, at any time, for any reason?

Not chiding anyone here.

These are serious questions.

It's like a bizzaro American government appears and starts printing their version of clown-bux.  California?

nope-1004's picture

Goldman called the fall a few weeks ago.  Anyone that didn't notice shouldn't be buying bigcoins.

http://www.zerohedge.com/news/2017-07-03/goldman-sees-bitcoin-soaring-hi...

 

I realize the temptation is yuge to get in a make some cash, easy cash.  But, as long as the financial system is still intact and controlled by the big banks, manipulation of all assets will continue.  Crypto's included.  How one can go from being an ardent gold bug, then seeing it crater, to then changing fantasies and chasing cryptos and holding the knife while it falls, speaks to some very real personality problems.  If that is you, you are a front-runners wet dream.

We've all seen PM's get smashed and treasuries mainpulated, the Gold/YEN carry, on and on.  Now, somehow there is this sliver of a market that the big banks and the Fed can't touch?  Really?  While the economy is still firmly controlled by the big banks and the Fed?

NOTHING will change on this pump and dump economy until it implodes.  And that's why I hold PM's and not cryptos, not for return, but for protection.

CPL's picture

Easier mining them yourself.  It's not fast and the ROI on equpiment is 5 months.  It still is the only method to double your money on capital invested at the moment.

Lore's picture

Because mining them is time spent productively.  /sarc

For distraction, I prefer fidget spinners. At least those entertain my nephew and drive my sister nuts. 

I still haven't found an explanation that dissuades me from regarding these things as anything more than rigorously-rationalized, energy-intensive scams. But let the games and capital misallocation continue.  Falling EROEI will force people to reshuffle their priorities in due course, or rather, their priorities will get reshuffled for them. 

StackShinyStuff's picture

Say what you will about these things.  Either buy them or don't.  But given the propensity for this shit to spike why the fuck would you short it?

dark pools of soros's picture

The Blockchain is a public trusted ledger. You too stooopid to understand the value of that nanny boy

mrtoad's picture

research the blockchain technology. the technology is here to stay. Its like saying 30 years ago no-one will use mobile phones, how ridiculous. Televisions to replace radios, hahaha. a metal machinery device to replace horses, hahaha.

Pool Shark's picture

The value of anything with a potentially infinite supply approaches ZERO.

Anybody can start a crypto-currency (and recently, Anybody has).

Ethereum, Lite-Coin, Bitcoin, ZitCoin, My-Coin, Your-Coin, Our-Coin, etc...

There was a time when Bitcoin was the only game in town; that time has passed.

All crypto-currencies will eventually reach their instrinsic value: ZERO (or at least close to it.)

Not to say you can't speculate and make a fortune in the short-term, but, you can also lose a fortune too...

 

tmosley's picture

Anyone can tinker with the code just like anyone can tinker with a copy of a word document.

But its the one that is maintained by the majority of the miners that the market uses.

Jubal Early's picture

"majority of the miners"

And crypto-heads would never cheat in an elections.  Trust me, your bits are secure.

tmosley's picture

If the miners went rogue, the users would move to a blockchain where that didn't happen, and the miners would lose everything.

Thus why the miners haven't ever really gone rogue in this wild wild west setting.

Jubal Early's picture

"If the miners went rogue, the users would move to a blockchain where that didn't happen"

As if that exlains anything.  What if there was a syncronized attact on some key miner communications infrastructure?  An HAARP created electrical storm over Shanghai?

There are thousands of scenarios and in the end it is just speculation.  Are we willing, or is it smart, to retreat into bitcoin in this war against cash?

shocktherapy's picture
Timestamp hacking

One reason that certain parties have an interest in knowingly contributing false timestamps to the network involves the way rewards are distributed according to the Bitcoin protocol. The difficulty of the “cryptographic puzzle” that miners are attempting to solve is configured to readjust its difficulty every 10 minutes. If miners can fake their timestamps they can make it appear that the network is less powerful than in fact it really is, thus making the puzzle easier and potentially generating higher returns. 

https://cointelegraph.com/news/timestamp-hacking-debunking-the-myth-of-p...

Jubal Early's picture

There we go.  And this certainly isn't the only vulnerability.  But as I have said before, do you want a clickey-clckey online bitcoin world where there is never any interaction with your vendor, or do you want to pay cash to some guy in your neighborhood who makes a living from it?

ExplodingEntropy's picture

Thank you bro!

A lot of crypto hate here. We shall laugh whence they are gold holding peasants! 

shocktherapy's picture

I believe most people on this site hold gold or silver for survival purposes. It is my belief that most gold and silver holders already have the house, car, garden, etc..... 

While most people on this site hold bitcoin to get rich. So what does that say about you move away fiat ? Do you really believe in a move away from fiat or are you looking for the next bag holder ?

 

ElTerco's picture

These comments make me feel safer and safer about crypto. Decentralized, anonymous, and easy to tinker with the backbone code that tracks it.

PN7's picture

Without going into detail here, and subject to correction by anyone who is more familiar with the rules of bitcoin than I am, changes to the bitcoin format must be approved by voting by the owners of the bitcoin "nodes."  I think there are several hundred "nodes" but I may be wrong.  Each node contains a complete copy of the bitcoin blockchain, which is a complete record of every transaction that ever occoured in bitcoin.  So if part of the internet goes down in one or two parts of the world, copies of the complete blockchain will still exist somewhere.

I believe that in order to install the Segwit (Segregated Witness) change on August 1st, 95% of the owners of the nodes had to agree to the change.  Seems rather high; but I guess they managed to convince enough owners of nodes to get 95% agreement.  What the Segwit change hopes to accomplish is to speed up transaction times by "segregating" old records of transactions off into a special area, freeing up room on the blockchain for current transactions.  They also intend to double the size of each of the blocks in the blockchain to enable retention of many more records of transactions. I do not know how to become a node owner.  Anyone who knows more, please feel free to comment or correct me.

omniversling's picture

This fella talks about the fork and what it means for the future of BC: http://usawatchdog.com/bitcoin-civil-war-coming-soon-kevin-lawton/

BC was first floated as the 'peer to peer' anti-establishment anti-bankster outside the square method of transacting anonymously. (BC = BitCoin and BlockChain). Now, 2 years later, we've seen:

1/ User ID's traced (all transactions on blockchain recorded and could be interrogated by legal process, forever)

2/ BC confiscated by FBI and sold back into the market

3/ Big mining now moved to China (read a year ago that once a cartel gets hold of more than 51% of mining capacity they can influence blockchain structure

4/ Transaction times so slow it will NEVER match or compete with CCs or even cheque clearance, so is less than interesting to a busy retailer = will never achieve widespread adoption and in the meantime may be replaced or forced to make way for a faster 'approved' Bankster version.

5/ Scaleability is built-in already with fractions of a BC all the way down to a billionth< (keep going), so it's also 'inflatable'.

No doubt if you time your 'in and out', you can exchange BC profits for other fiat, and then PMs with the extra units of exchange that all the speculation is bubbling up. But isn't this becoming just like the old system that so many ZHers reject? Something out of nothing? Derivatives and bets on bets?

The down side is that all this 'exuberance' is massaging the resistance to a cashless society out of even the brightest 'alt' thinkers. Are we living in a 'real world' with a medium of exchange based on tangibles that our physical experience confirms as truth? Or a virtual world of digital fantasy where everything can be corrupted and mimed. Once the net is 'ID verified users only' (it's coming), only the gangs that own it will have freedom and anonymity (plus their own private bandwidth in IPv6 that they can keep functioning whilst shutting the rest of us plebs off).

DoD/DARPA own the net so ALL BC transactions traffic on THIER highway pass through THEIR nodes (expect highway men and tollbooths eventually).

"PM's bad, Cryptos good" = BaitCon.

Fox Moulder's picture

I'm a newbie but AFAIK yes, anyone can change the code, it's a matter of getting thousands of others to start using it. Chances are pretty slim if you are not a Major Player.

logicalman's picture

How long does it take to input 140 characters into twitter from a cell phone?

I have no clue as I have neither Twitter nor a cell phone.

During WW2 my dad could send 60 words a minute easily, up to 90 in a pinch and recieve about twice that by morse.

Ended up working on Enigma.

nmewn's picture

Turn those damned machines back on!!!

I mean...off ;-)

CPL's picture

When you see a drop in the BitCoin market it's actually an indicator of someone dying.  I'm willing to bet the person that placed the short order isn't breathing this morning.  Procedurally the team is sent in to empty a clip in the back of the short sellers head so it's a closed casket funeral.  Then liquidate all the the 'clients' assets to open market to release the BitCoins back into the pool.  I know it seems a little extreme, but it's for the best operationally to finish the entire BTC block chain to get the key out of it.  Kill 1 or kill 8 billion, doesn't matter.  The ends justify the means, and they are just getting in the way of a larger project goal requirements.   Not like they actually PAID did they, they don't have any rights otherwise.  Just meat suits that are getting shoved slowly, for fun, over the cliff with the full knowledge they are getting shoved over the cliff.  It's hilarious.

Besides they were all going to die anyways, they might as well make themselves useful and have a little fun ith the meat suits before hand.

therover's picture

Good for you. I just bagged 4 Morgan dollars on my way home. Had to cure my fix. That fake C note in my pocket needed to go...still got a fake double saw as change but I will figure out a way to get rid of that too. Merc dimes may find their way into my pocket soon. 

Aerows's picture

I have a very small position, and I'm keeping it.  Everyone else can jump ship right now, and I will still have a very small position, but the upshot is that if it goes up again, it is more than I had to begin with!

Schmuck Raker's picture

“It’s moderates versus extremists”

Bull. Shit.

It's Corps versus Libertarians.

Sudden Debt's picture

For something that's not controlled by anybody, it sure is weird that there are a few factions that actually control it in pricing and it's entire tech part.

It's just a game token and they just proved it.

It's just to bad for those dumbasses who got caught in the flytrap...

Just waint untill it breaks 1300 dollars!

tmosley's picture

>Just waint untill it breaks 1300 dollars!

Gold or Ethereum?

Hahahaha

Michigander's picture

Shit...im used to this volatility. I buy bullion too.

mkkby's picture

Yep.  And for something that cannot be manipulated, strange how there are 5.5 million NEW shorts (on top of the older ones).

Shit coin is going to zero, when goldman decides it should go to zero.  Just like every other commodity traded.  Shortly after shit coin is destroyed the banksters will announce their fully supported/safe crypto currency.  The takeover will be complete.

Lost in translation's picture

DAMN you! I'm climbing the WALLS not having range access! JEALOUS!

HRClinton's picture

"Battered", Tyler?  When BTC was at $100, Gold was at $1700.

You and your goldbug advertisers and coin shops have some "splaining to do", sir.

JTBfromtheWL's picture

We know gold is battered. It almost always is. Reality check: -30% bitcoin in ~6 weeks is being battered, man.

I predict btc will fall to almost exactly 1857 as goldman sachs predicted. They need to build some credibility in order to fleece traders later. Especially on exchanges they manage (you don't know which ones), and all the derivatives involved, including the newly 'officially legal' options. Leverage on!!!!

HRClinton's picture

I'm not saying that its not battered. It is. 

But you seem to miss the point: 1. Context, and 2. It's all relative.

Like all people, goldbugs too get defensive when you flag facts that undermine their narrative: "Everything is awesome, when..." you buy bullion, no matter the price.

I NEVER trust any one asset, and don't treat it like some magical unicorn that will make me rich one day. Which is what most shills or stackers sound like.

(FWIW, I too have some, but I have very low expectations. I treat it like old baseball cards or ancient comic books, that might have value some day. I prefer my Reality hat over a tinfoil hat, that's all. Although, at current silver prices, Silver looks like a cool and affordable alternative to Tin. Especially since it's a better electrical conductor. Sorry for being cheeky. If goldbug can dish it out, I figure they should be able to take it too.)

Peacefulwarrior's picture

Until there is an agreed upon backing to make this a legitimate currency, YOU are Right "it is a Trader's WET DREAM"!

tmosley's picture

Backing is for centrally issued paper notes, not for things like crypto or gold or silver.

Peacefulwarrior's picture

This is True but these guys are in the Mosh Pit to eventually legitimize as a centralized Digital Currency aren't they. Otherwise, what's the point of their existence and evolvment? Aside from what we already know they provide

tmosley's picture

They are getting involved because they are a bunch of very intelligent people (the smartest used to become scientists, but at some point they switched and became banksters--that's where the money is), and they recognize that the tech is going to eat their lunch if they don't get out ahead of it.

It also provides a lot of benefits for them, even if it puts them on a more level playing field with us plebeans. Far more efficient and quicker than the current circa 1980's sytem the banks use today.

Nice thing about free markets is that they force sociapaths to serve society if they want to get rich. Crypto offers us a chance to return to that ideal.

Aerows's picture

When you can buy legitimate goods with it, say from Amazon or other retailers, pay your electricity bill with it, and your rent, then it isn't exactly something outside of the mainstream consciousness.

You can't pay for a sandwich without infrastructure to purchase said sandwich using a form of currency.  Here is the crossroads at which cryptocurrency has arrived.  I believe those hurdles will not be jumped, but flown past without notice or a look in the rearview mirror.

Michael Musashi's picture

I'm in at 1800. Charts say it won't go that low.