Bitcoin, Ethereum Plunge Accelerates As Scaling Deadline Looms

Tyler Durden's picture

Yesterday it was Bitcoin, today it is Ethereum that is taking the brunt of selling pressure (down 20%) but the dumping of virtual currencies is evident across the entire crypto space with the biggest market cap coins tumbling to 2-month lows...

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 traded as low as $1830 early this morning to two-month lows... as one veteran of the cryptocurrency trading space told us, "shit's getting real, no one is sure what happens after August 1st , so traders are taking profits, squaring positions into the scaling deadline."

 

But Ethereum is getting battered today, down 20% overnight to 2-month lows...

 

While the main driver of this selloff is undoubtedly anxiety over the looming scaling deadline on August 1st, we note that, as CoinTelegraph reports, none other than the Albanian central bank has joined the chorus warning about the dangers to the public of virtual currencies... Bitcoin and other cryptocurrencies have been making headlines around the world, and with the recent sell-off this week, more is sure to be said. Central banks and governments continue to make statements regarding the dangers of digital currencies, or, conversely, extolling their benefits. The most recent bank to issue such a warning is the central bank of Albania. The bank issued a strong statement warning citizens that digital currencies were not under the direct purvey of the country’s banking sector regulations and that such vehicles carried extremely high levels of risk.

The Albanian authorities stated:

“We appeal to the Albanian public to be mature and responsible in the administration of savings or liquidity they possess. One should orient investments toward financial products and instruments offered by institutions licensed and supervised by the Bank of Albania and the Financial Supervisory Authority.”

The anonymity and decentralization provided by Bitcoin made nefarious activity not only possible, but probable, and the bank warned against the clear risks taken by those choosing to invest. Bitcoin enthusiasts would clearly point out that a centralized bank is the very essence of what Bitcoin is seeking to distance itself from, and so a less than glowing review would be expected.

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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tmosley's picture

Woke up and saw the sea of red.

So I bought quite a bit, damn near bottom ticked it.

Up 12% so far. Feels good knowing all this has happened before, and all of it will happen again. The adoption curve is unstoppable.

Looney's picture

 

The horror-show Tales from the Crypto-Crypt.  ;-)

Looney

TahoeBilly2012's picture

picture perfect ABC correction after 5 waves up. Look for a 1 2 (i) (ii) and up we go.

BaBaBouy's picture

How many Cryptos out there now, 900+ ???

Are they gonna split also on Aug/01 ?

tmosley's picture

No. Just bitcoin.

Which is why I hardly have any of it. Too scary for me. If it turns out well I might buy some.

Notveryamused's picture

Yeah I was short Bitcoin leading into these weeks as I expected some FUD but currently closing them and buying a range of blockchain companies at bargain prices. Some of them are <2 months away from product release and have more cash in the bank than their current capitalisations.

Saving a little dry powder in case there is a split and I can buy even cheaper.

Amazes me that some people can't see how many industries blockchain technology is going to disintermediate. They missed the currency boom (BTC & friends) then the platform boom (ETH & friends) & now they're missing the chance to buy the biggest one of all, the application boom, where we see actual products and businesses being built on the foundation that the currency and smart contract platforms have laid.

atomp's picture

I'm looking at Penn Central Coin now, it's going to be yuge

tmosley's picture

Some do, most don't. Same as with anything else.

DontGive's picture

Some don't, most do. FIFY

tmosley's picture

I'm sure you can provide statistics to back up that claim.

DontGive's picture

I can't give you a link, you will have to do your own homework, or take my word for it.

In the space from the beginning, watched most 'blockchain backed' outfits go tits up.

http://btct.co RIP / Havelock RIP

Sure there is ICO/Eth now, but that also doesn't mean dick - not when it's not exhibiting 'currency' characteristics.

tmosley's picture

Were those businesses that existed in the blockchain/had algorithmic payout distribution to investors? Or were they just businesses that were vaguely in the sector?

Seems like fraud becomes less commonplace the older a new medium becomes. Names start to accumulate good reputations based on their continued existance, etc.

That said, I don't have anything in any such companies, though I have been eying a couple.

secretargentman's picture

I wonder how the ETH plunge is affecting the PillarProject ICO...

PP's picture

978+

everyone can offering his own digital currency

and use a small amount of US dollars to let so-called freedom, independent editors such as ZH to write a colume to promote it

tmosley's picture

There were far more currencies than that in the era of free banking.

Worked quite well. You should read up on it.

Jubal Early's picture

978 different currencies in the US?  Really?  How about they were notes denominated in dollars which represented a specific weight of silver or gold which that note was redeemable for.  

All those crypto's are just a bunch of electrons, there is no way of determining their relative value let alone their real value since that is non-existant.

tmosley's picture

Some bank and business issued currencies were backed with PMs, some were not. Market forces made sure most of them were prudent, and didn't overprint, but people still had to be wary and do their homework.

>Just a bunch of electrons

Kind of like websites. Better turn off your computer, you are wasting your time with all these electrons!

Jubal Early's picture

In the end it was all dollars, and a dollar was 1/20th an oz of gold.  If a note promised payment of $5 dollars, that was immediately exchangeable into gold or silver.

The exchange rate between crypto's may be to some degree linked by dollar prices, but they aren't denominated in dollars.  You are comparing apples to oranges.  Besides those notes were all debt instruments where the value of the note was based on payment of a certain amount of dollars (meaning gold) possibly at a certain date.  

Crypto's don't have any commitment or obligation backing them.  They are worth nothing except what current fads says they are.  

tmosley's picture

You need to read more and type less. You have absolutely no idea what you are talking about.

Jubal Early's picture

Once again you turn tail and run and hide.  Yankee coward.

tmosley's picture

What the fuck are you talking about?

Bank issued currencies weren't backed byt the US dollar during hte free banking era. I told you to read up, you didn't, and instead chose to make up some shit and state it like it was fact.

If calling out blatent fucking lies is being a "yankee coward" then stick a feather in my fucking cap.

Jubal Early's picture

If the free bank reserves weren't in paper dollars or gold then what were they in?  Bits?  Bwaaa.  you are such an asshole.

tmosley's picture

You are very spirited in defending your ignorant claims.

Many of those currencies weren't backed by anything. I know you are too much of a subhuman to actually be counted on to educate yourself, but it is the white man's burden to at least try to elevate the ignorant negro savage to at least some extent: https://en.wikipedia.org/wiki/Free_banking

Jubal Early's picture

"In a free banking system, market forces control the supply of total quantity of banknotes and deposits that can be supported by any given stock of cash reserves, where such reserves consist either of a scarce commodity (such as gold) or of an artificially limited stock of "fiat" money issued by a central bank. "

That is exactly what I wrote, their reserves were dollars, dollar bonds, or gold.  There is no comparison to some crypto currency that is denominated in a crypto currency that itself is "virtual".

tmosley's picture

Congratulations on admitting to being browbeaten into reading the first two sentances of a wiki article.

If you had read a bit further, you would have found that there were many securities that could be used as backing (ie bonds), and that systems with truly free banking had no such requirements at all--ie banks could issue scrip.

Now let me browbeat you into watching this short youtube clip: https://www.youtube.com/watch?v=-tGL-buZ94Y

Take his advice, Summer.

Jubal Early's picture

There were not 978 different currencies in the US during that period of "free banking".   If there were, then please list the first 10.  There is no comparison to all these different cryptos of no real value each based on a different "block chain".

tmosley's picture

"In the United States, the Free Banking Era lasted between 1837 and 1866, when almost anyone could issue paper money. States, municipalities, private banks, railroad and construction companies, stores, restaurants, churches and individuals printed an estimated 8,000 different types of money by 1860"

https://en.wikipedia.org/wiki/Private_currency

Double down on your ignorance again. I'm sure you'll win this time.

 

Jubal Early's picture

And all 8000 of them were denominated in dollars and were dollar notes.  Once again, that is not the same as 978 different cryptos all denominated in their own currency and none tied to anything realy.  A dollar was 1/20th an ounze of gold, so all those notes were merely private notes based on the same "money", gold, which is what the consititution defined as the only legal tender.

balanced's picture

As opposed to PMs? You talk as though PMs are not currency with their own fluctuating values (manipulated or not, this is the world in which we live). "Backed by nothing but confidence" explains every form of money (currency) in the world. You can wax philosophical, and claim that PMs are not currency, but money, and have held their value for thousands of years, but then what you are really saying is that when the manipulation ends, which is to say when the entire global monetary system collapses, PMs will be the only thing left standing. In which case it would be wise to consider the fact that cryptos exist independent from that system just as PMs do.

Jubal Early's picture

Really what I am saying is that I don't want my grandchildren to grow up in a world where all transactions are electronic and made over chips in their arm, neck, or forehead, or over some other device.  Cryptos when followed to the logical end represent electronic enslavement.  What is wrong with plain PM coins or even anonymous chits that stand for them?  Why do we need miners and private keys and forks and all the other melodramas?

tmosley's picture

Hahaha, shouldn't have signed your kids up for Social Security numbers, then.

If you think that the free market that exists in cryptos is going to enslave your grandkids, then you are somewhere past "Simple Jack" on the scale of full retardation.

Notveryamused's picture

"All those crypto's are just a bunch of electrons, there is no way of determining their relative value let alone their real value since that is non-existant."

At the moment gold is priced off a bunch of digital contracts so there is no way of determining it's real value until physical demand overwhelms supply.

Bitcoin is limited and digital so it's actually harder to obfuscate it's real market value than gold.

AtATrESICI's picture

“Paperless digital money eventually returns to its intrinsic value – zeros.” (Voltaire, 1694-1778) Often Rather Quickly

Damn, that Voltaire was way ahead of his time with the quote above or perhaps just a student of His-Story.

eclectic syncretist's picture

So if you win a lottery and can only claim your prize in either gold, land, or the cryptocurrency of your choice, which would you choose and why?

It really comes down to whether or not you want to gamble or preserve what you have.

AtATrESICI's picture

Blockchain projects that are software platforms will survive if they are found to have an intrinsic value that an average person can find utility from aside from speculation or illicit transactions. Some projects that are more than just coins that supposedly store value are below.

LBRY
Siacoin
Steem
Numeraire
Storjcoin
Golem
and the alike

Meaning at least I can store some files, write/read an article, crunch some computation, or watch a movie with my crypto coins. Some tangible value. Not just speculative value.

That is my hallucination... Software is still software if there is not value as software what is the fucking point to develop it.

Software devl. to the moon.

Barring an EMP, super volcanoe, CME, or something like this.

AtATrESICI's picture

or i could be wrong under the greater fool theory... G.D. I hate foolish shit.

OpenThePodBayDoorHAL's picture

99% of the "data storage" ideas are BS, substitute the word "database" for "blockchain" and see what you get. Oops oh look doing calcs and storing data on a blockchain is only, um, *400 million times* more expensive:

https://hackernoon.com/ether-purchase-power-df40a38c5a2f?lipi=urn%3Ali%3...

 

therover's picture

Serious question...can you really apply technical analysis to this stuff (and the bigger question...to ANY of this shit now n days) ?

JethroBodien's picture

tmosley thinks you can.   He is a savant and knows something the rest of us don't

tmosley's picture

Gaps must fill. That is all you need to know.

Fundamentals point strongly upwards, and cryptos are a free market. Manipulation can't be acheived without actual expendature of resources, unlike stocks and PM markets. All they can do is drive the prices up in terms of fiat by buying, then down by selling.

tmosley's picture

Human nature. When the people that bought on the way up suddenly see that they might be about to go underwater on their investment, the natural reaction is tro try to sell, so they do, and the selling is generally proportional to the number of people who got in on such spikes. When something spends more time rising rather than gapping up, there won't be a bunch of people spooked all at once on a fall.

At least, that is my analysis of the phenomenon. Even if it is incorrect, the saying is true.

medium giraffe's picture

I can think of a dozen instances of it not being true.  It's true because there's a saying? 

Gapping up would suggest there are large orders from a small number of participants with deep pockets rather than a wider group of people steadily trading through an entire price range.  Gaps are also indicative of a lack of liquidity.

Will the big guys puke or defend their positions above the gap?  Will a greater number of participants that created a steady rise cause a smaller or larger rush for the exits?

I'm not trying to be rude, but these common axioms are utterly worthless and will fuck you over if you rely on them.  The market doesn't give a shit what you think it should do.

tmosley's picture

>I can think of a dozen instances of it not being true.

I can think of lots of instances of low probability outcomes occuring too.

If it works, it works. If you want to write a research paper explaining the phenomenon so you can tell us when it does and doesn't work, or giving us a better indicator, feel free.

ElTerco's picture

Don't worry. tmosley is the market maker in crypto, since every time it falls, he buys hand over fist. Or so he says. Either way, he's the man you are resting the solvency of cryptos upon, and he has all the answers while the rest of us are ignorant.

tmosley's picture

Yeah, I'm sure its just me in here.

I have a lot of answers, because I educate myself and actually change my mind based on what I learn. You people largely have no arguments. Just demented screeching.

fiftybagger's picture

ROFL, this is the only stuff you can apply TA to.  Try doing that with silver.