Crypto Chaos Explained - Bitcoin Crashes As 'Cash' Tops Ether For First Time

Tyler Durden's picture

Bitcoin collapsed overnight, trading as low as $5555 - down 30% from its highs - before bouncing back above $6000, as Bitcoin Cash soared to as high as $2450 (4 times its price on Friday), overtaking Ethereum briefly as the second largest market cap cryptocurrency.

image courtesy of CoinTelegraph

Bitcoin has lost around $30 billion in market cap, but found buying interest as it ripped below $6000 and has stabilized this morning

Bitcoin Cash exploded in thje last two days - quadrupling in price at one point to over $2400 as Bitcoin crashed.

 

As Coin Telegraph reports, the sharp rise in Bitcoin Cash's price has come at the expense of Bitcoin. Bitcoin’s price has been on a steady downtrend ever since the Segwit2X fork was cancelled. A lot of people had bought Bitcoins in the expectation that they would get free Segwit2x coins after the fork. While market observers had expected some of this hot money to flow into altcoins once the Segwit2X fork happened/got cancelled, Bitcoin Cash seems to have been the main, but not only, beneficiary. The combined price of Bitcoin and Bitcoin Cash is over $8,000, which is not very different from the price on Friday.

That surge in Bitcoin Cash pushed its market cap above Ethereum for a brief time...

 

All of this chaos has left many wondering what is going on. Arjun Balaji provides some much-needed context for what is occurring in the crypto space...

1/August, Bitcoin forks, spawning off a fork that's supported by a minority of miners. It's self sustaining though the rate at which Bitcoin blocks are mined is variable and the price tanks. It was initially trading on the futures market prior to the fork between 0.05 and 0.07BTC. The motivations for the initial minority fork are complicated and nuanced, but they were largely driven by the incentives of trading on the futures market prior to the fork between 0.05 and 0.07BTC. The motivations for the initial minority fork are complicated and nuanced, but they were largely driven by the incentives of Chinese mining and Bitcoin businesses whose operation depended on the low transaction fees in the network (given Bitcoin txn fees were approaching $10).

 

2/ When Bitcoin Cash (BCH) tokens were finally accessible, there was a rush to go liquidate the tokens on an exchange. With really thin orderbooks, price shot up to 0.26 on the BTC:BCH pair, but had a slow decline over the next 2 months, bottoming out around 0.05ish. This is all the while Bitcoin continued it's meteoric rise to $8k+.

 

3/ However, "Segwit2X" (B2X), another long schemed fork was still planned. This fork had even less popularity, reflected on the futures market, but had a lot of support from many mainstream Bitcoin businesses. It had ideological overlap with Bitcoin Cash: increase the block size to lower transaction costs on the Bitcoin network. Many users of Bitcoin who were worried about the merits of the technical block size increase were vocal about avoiding these forks and still maintain conviction that lowering transaction costs through the Bitcoin network is possible through some recent upgrades.

 

4/ As the date for B2X fork grew closer, Bitcoin Cash eventually bottomed out. The market's assumption here was that there is no need for 2 forks with ideological overlap to exist.

 

4a/ However, in a sudden move, there was a cancellation of the fork on November 8th, with much of the support of the 2X crowd going into Bitcoin Cash. This started a fantastic price spike--in USD, from $400-500 up to $2800 (as of last night) and in Bitcoin, even higher, with orders executing between 0.4-0.5BTC. As of now, it seems to be stable at low volume —0.3BTC.

 

5/ Many long-time holders and significant Bitcoin "whales" noted online how they are planning on selling BTC and buying BCH. Most notably, Roger Ver moved long-time cold storage Bitcoin holdings totaling over $250M to Bitfinex. Not sure if this has been executed upon or not, but the presumption is that he is either buying BCH or selling BTC for USD. The goal of this (IMO) is to generate momentum and the reflexivity needed to create a "flip" between BTC and BCH.

 

6a/ It seems like 1) miners incentives are aligned with BCH for now but it's unclear if it's just because of the volatile difficulty or if it is permanent;

 

 

6b/ 2) money is dumping out of BTC into BCH. When/if BCH becomes more profitable, miners will follow -- at that point, do businesses like Coinbase recognize Bitcoin Cash as the canonical Bitcoin? No idea, but it'll be interesting to see play out.

 

7/ Bitcoin Cash has a planned hard fork on Nov 13th to adjust the volatile difficulty of mining. It remains to be seen whether (at a stable price), post-fork, miner incentives will remain as strong as before. If they are anticipating a large increase in price or have spent the last couple of months accumulating BCH at a low price like many have hypothesized, that could play a role as well.

Arjun concludes, net-net, this is a mess for most mainstream users (e.g. my dad), who have no idea what's happening and potentially don't own Bitcoin Cash.

The end of Bitcoin (BTC) and rise of Bitcoin Cash could hurt these users, who potentially bought Bitcoin on Coinbase in August and don't know about these risks. This puts the emerging futures and ETFs in an interesting picture.

*  *  *

The various factions within the crypto space are increasing their rhetoric... (as CoinDesk reports)

When asked about the move Jiang Zhuoer, founder of bitcoin mining pool BTC.Top, said simply that "2x fans" are moving both funds and mining hardware to bitcoin cash.

 

"BTC is going to die," Zhuoer said. Hapio Yang, CEO of mining pool operator ViaBTC, responded similarly, indicating he believes that businesses and investors are now migrating funds to bitcoin cash.

 

"I think more and more bitcoin holders are starting to understand what is the real bitcoin," he said via WeChat.

 

"I think a positive feedback loop has been created. This is waking people up to the shaky foundations BTC is built on," he said.

However, as CoinDesk notes, there remains a great deal of skepticism over cash...

Jack Liao, the CEO of Hong Kong-based mining firm LightningASIC, for instance, sought to frame the idea that the bitcoin cash price increase represented any real uptick in interest in the project as "total bullshit."

 

For those following the scaling debate, Bitmain's conduct has been one of the larger contentious narrative points, and Liao (like others) believes the explosion seen in the bitcoin cash market value is nothing more than an orchestrated bid by the firm (and its supporters) to prop up the market.

 

"Many, many investors just see the change in hash rate," he said. "But they cannot support such a big bitcoin cash price."

 

Beijing-based over-the-counter Zhao Dong reported a similar sentiment in some circles, crediting the price to manipulation by miners and investors who have supported Segwit2x and bitcoin cash in the past. Bitmain and Ver were both signatories of the agreement that sparked the 2x software.

 

"They have money, they have hash power, they have everything need to pump the bitcoin cash price," he said.

Finally, to clarify, Willy Woo, recently named one of CoinDesk's Top 5 Token Analysts of 2017, sees the price move as perhaps one to watch. In contrast to other alternative cryptocurrencies that he said may lack value propositions, he went so far as to color bitcoin cash as a more nuanced option.

"It's backed by a lot of money from China controlling its price and supporting its network. If you buy bitcoin cash, you are betting that China wants it to dominate. That's a strategic and geopolitical bet," he told CoinDesk.

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razorthin's picture

I never saw that coming!  Oh, the humanity!

BaBaBouy's picture

Cash (Fiats) is trash ???

HisNameIsRP's picture

>Head and shoulders?

>BTFD?

eforce's picture

Bitcoin Cash received a $150m Tether pump.

rccalhoun's picture

btc + bch + btg is now about $7900  

 

NoDecaf's picture

it's like crypto game of thrones

 

BallAndChained's picture

All the cab drivers are bragging they have a Block chain of Nothingness. Soon chains of Nothingness will be selling for $10 million each. Everybody will be billionaires except yourself. You will be sorry if you are the only one left without a chain of Nothingness.

Huckleberry Pie's picture

I missed the boat on cryptos, but follow them. Don't own or trade them, but that chart that ZH posted, shows a healthy pullback and temporary base. How high it goes...F*** I don't know.

tmosley's picture

It is vital that everyone who wants to be informed about BCH and the future of BTC watch this: https://youtu.be/UuQfuCqupkI

PrezTrump's picture

I'm really disappointed tmosley, it looks like you picked the wrong side (BTH).  

bobcatz's picture

No matter what they do, the Dollar is DEAD. http://wp.me/p4OZ4v-2GY

PrezTrump's picture

The guy in the video is an idiot.  What happened in BCH was pure market manipulation.  It was all from the Korea exchange.  There was an incredible new number of trolls that appeared in no time in reddit and various other hubs.  BCH is controlled by Jihan, Verr, and company.  Damn, man did you do no freaking research?

tmosley's picture

I did enough, and now I am worth a great deal more than a was 72 hours ago.

All you need to know is the fee on Bitcoin is TOO DAMN HIGH! Bitcoin was taken over by corporate interests who failed to address the concerns of the users, and so now the users are leaving. The speculators don't really understand the USE of crypto, nad as such only want the coins they hold to go up in value without actually thinking about their use cases. Having transactions be expensive is NOT a feature users are intersted in.

Also, the "guy in the video" is Rick Falkvinge. Read his missive to the community if you can find it. It is very important. I posted a link in this thread, but I think the pdf got taken down.

PrezTrump's picture

Sorry, but all arguments for BCH are made invalid by the fact this was orchestrated so that Jihan and Verr would control Bitcoin from now on.  You are clearly talking your book, like common wall street trash, I thought you were better then that?

Now im making money on it too, but im sticking to the facts.  And I don't think its over yet, I think Jihan and Verr are going to lose a lot of money propping up their scam coin while others frontload and dump on them.

tmosley's picture

>but im sticking to the facts

You aren't. You are sticking with your emotions and ad hominem. It doesn't matter who is backing it because if they fuck up, it will fork again and we'll be right back here, or antoher, better coin will make a run at the top spot. What matters is that they are quicker and cheaper than BTC. That is what the market cares about. If Falkvinge is right and they get their fees down to a fraction of a cent, then it will all be over.

PrezTrump's picture

There is still the upcoming difficulty changes which will affect the dynamic price structure between BCH and BTC.  The BTC backlog will clear. It's just a matter of time.  Meanwhile, we have seen what a low float BCH has by virtue of its ridiculous moves.  You really want to make these scumbags richer?  Those that have hijcaked the bitcoin name?

 

In fact, BTC backlog is, for the first time in a few hours, under 158k and dropping.

Golden Phoenix's picture

>If Falkvinge is right and they get their fees down to a fraction of a cent, then it will all be over.

As you are fond of saying, Iota's fees are zero. Why isn't it over already?

Why do you listen when Falkvinge tells you what the market wants but not when almost every other market participant here tells you it isn't BCH?

Could it be you're getting hit with shit being flung at BCH and you just happen to be holding it?

tmosley's picture

>Iota's fees are zero. Why isn't it over already?

Because their product is garbage, tbh. Needs a LOT of work before its ready for prime time. But the concept is spectacular. Another problem is that there is a firm leader in Bitcoin, and the vast majority of money coming into the sector is going there. Only a few manage to find there way into IOTA. Psychology favors another coin with the word "bitcoin" in the titel, especially if it has a good chance of getting its name changed to "Bitcoin" once it manages to flip into the top spot.

>not when almost every other market participant here tells you it isn't BCH?

Most of the people talking shit about BCH are people who are focused on speculation rather than the actual value of the coin for its users. They seem almost contemptuous of the idea of using bitcoin for everyday purchases. The tail is wagging the dog.

>Could it be you're getting hit with shit being flung at BCH and you just happen to be holding it?

Nah, I bought it on purpose. I was interested in it at first as a trade, but when I read up about what others were saying, specifically in regards to the failure of the last hardfork and the apparent end of possible BTC reform, I jumped ship. A workable solution is needed NOW, not next month, and not sometime mid next year. NOW. If it isn't BCH, then the major alts are up next. Dash seems to be getting a bit worked up. Good thing too, since I still have my core position in it.

 

rygar's picture

@tmosley

you seem to not understand that fees are part of incentive system that makes BTC work. Without fees, there is no room for miners. BCH is controlled by Jihan, who has freaking asic company, he does not care about fees - he is monopolizing market.

BCH story is bullshit about 'electronic cash' - so, they increased block size 8-fold. Now their system can process, lets say, 120 transactions per second instead of, say, 14. SO, WHAT FUCKIN DIFFERENCE DOES THAT MAKE? ZERO. It is still several orders of magnitude too small to serve ONE CITY. So their reasoning makes no sense, BCH are simply peddling bullshit just to justify their scam. Also, economically, 'cash' HAS to be inflationary to be good everyday currency (Gresham's Law). So, BCH guys are full of shit.

 

That being said, there is no reason to not use their pumping attempts to make profit for yourself. Everyone should do that.

 

I really doubt Ver sold his BTC. He would lost ability to manipulate the market. If he really sold them - IT WOULD BE GREATEST NEWS FOR BITCOIN IN YEARS. The guy is extremely hostile and toxic to BTC ecosystem - getting rid of him would be great.

 

tmosley's picture

BCH works just fine on low fees. Pennies rather than dollars.

Don't really care about the long term here. BTC just needs a fix NOW, or its going to be big trouble.

Ragnar Danneskjold's picture

Tell me the name of even ONE developer who's taking care of your code base over there on github. Do you know their experience?  Those fools have ZERO commits!!  They aren't doing a damn thing.

nomofiat's picture

Why do you want to end up poor?

Crypto is all about the long term. For long term survival high fees are necessary, without it any POW chain will die.

A crypto like bcash is just ignoring this fact. So it does not sound like such a great store of value to me.

Smart money does not buy bitcoin to spend it on coffee. So fees are irrelevant for serious money. The BCH astroturf campaign is therefore aimed at fleecing noobs by misrepresenting bitcoin's value proposition. Don't be one of those noobs.

Bitcoin is not paypal 2.0 but an immutable, censorship resistant bearer asset. If we keep it decentralised then it can become the defacto global asset ledger, the base layer of decentralised trust. Hell, it is already securing the land registry of entire nations! These type of use cases are fine with $1000 tx fee.

https://www.forbes.com/sites/laurashin/2017/02/07/the-first-government-t...

$1000 fees show that people are willing to pay a lot of money to hash a tx in the securest ledger mankind has ever seen. 

On the other side of the spectrum we have bcash where people are not even willing to pay pennies to use it.

 

 

Motaba's picture

If you are right why is the value of BCH going up?

crazytechnician's picture

Don't waste your time with these trolls. Let the market deal with them. Their fee market prices and massive tx delays has already started to wipe them out. Time.

nomofiat's picture

sfyl

 

tmosley will probably be blaming the jews for his own stupidity.

What's your excuse for being poor?

chubbyjjfong's picture

Dash and Iota look good right about now.

BallAndChained's picture

> All you need to know is the fee on Bitcoin is TOO DAMN HIGH! Bitcoin was taken over by corporate interests who failed to address the concerns of the users, and so now the users are leaving.

 

tmosley's next Pump n Dump will be asteroid mining of Bitcon. He says there is a bigly amount of Bitcon in those asteroids when he looks through the telescope, all conveniently mined and ready to harvest. tmosley knows a secret Chinese company building space ships to do this Bitcon asteroid mining.

Send him $1000 to find out the name of that secret Chinese company. He has limited his replies to only 500 so these replies are extremely rare. $1000 for a rare reply is a bargain.

PrezTrump's picture

we've made thousands.  keep stackin sucker.

Golden Phoenix's picture

Roger, Jihan, and BCH are the Harvey Weinsteins of the crypto world. They persist in running around waving their dicks in everyone's faces long after almost everyone indicated they had no interest and told them to get lost. Except it isn't fight club, it's real life.

BCH has one dev because serious devs think they are a joke yet BCH posts fake news about BTC Core devs all quitting and proclaiming BCH's superiority. Everything about them is a serious 'WTF'.

 

 

Spaced Out's picture

You keep mentioning Falkvinge, the guy whose last crypto business failed miserably in a very short time. I wouldn't class him as a crypto expert by any means.

The BCH price pump was mainly manipulation and has already faltered.

 

EDIT: I see Mosley is uncharacteristically very quiet after the price corrections today :/

nomofiat's picture

Wtf dude, I told you it was the exit pump. Are you still holding that trash coin? You are not very bright are you?

Anyway stop trying to trick other noobs into buying the bcash bags you are now holding.

I bet you will blame us jews again for loosing your money

putaipan's picture

pt- he didn't really ... he "flip-flopped"- his position from two weeks ago when he dismissively blew me and BCH off as authoritatively as he does to people who are stacking. he's a phonestar wanna be.

tmosley's picture

Changing your mind when the conditions change is the sign of a ______ man. Failing to change your mind when conditions change is the sign of a ________ man.

You fill in the blanks. SegWit got cancelled. Bitcoin Core basically said "fuck you" to the users. BCH is the logical contender for the name of Bitcoin, and likely its spot at number one. But other coins will likely win in the end. It will not have the aura of invincibility that Bitcoin has had until now. It is not a forevercoin. Though it could be if Falkvinge's vision comes to pass.

kochevnik's picture

BCH is the logical contender for the name of Bitcoin

Not really.  BTC is now an asset and slightly illiquid, like gold.  It is a store of value.  Illiquidity is a feature of BTC.  BCH chases other cryptos like dash and litecoin which do transactions much better and are established.  BCH has no niche and will likely have slow death

BarkingCat's picture

All you need to know is that I bought BitCoin even thought I know it is complete horse shit with intrinsic value of zero.

 

I said before buying that when I buy, Bitcoin will crash. It is 2 weeks since my initial $200 buy and less than a week since I bough the last $1,000.

Welcome to the end

Oswald did it's picture

I don't why you even post here.  Everyone here knows you're an idiot by now.  I've seen you post comments promoting iota for god's sake.  It's painfully obvious you don't what the fuck you are even talking about 

iamrefreshed's picture

No he was just calling you an idiot, correctly mind you.

JethroBodien's picture

Sadly there are people all over the world committing suicide becuase of these ludicrous moves.

Ragnar Danneskjold's picture

If you want a "money for the people" why wouldn't you go with LTC, and Charlie Lee, who happens to be an amazing developer and known to be trustworthy?  Who pump some brand new shit coing with unknown dev teams?  Also...To say that BCH isn't also a corporate takeover, is just BS. Known scammer, Jian Wu of Bitmain and the other miners, are pumping the shit out of this scam coin.  And Roger Ver?!?  The guy who said that Mt. Gox was safe??  Ex-Felon??  Yeah...I want to trust my wealth to those fucktards.

Luc X. Ifer's picture

Agree. Litecoin/LTC is the real deal.

shitshitshit's picture

I find it plain amusing -if not amazing- that ZH and the rest of the press always come out with very interesting interpretations about the latest price action, when it goes up(!).

That's it buddy, when it goes up, and not when it tumbles, or not always. Remember these Venezuelans and Zimbabweans who can barely afford toilet paper or other amenities in their own countries and could by themselves alone lift the capitalization of bitcoin up to an untold figure of whatsoever billions (and soon trillions)?

Now take for instance the latest crash, there has been no report whatsoever for a number of days (I didn't take that count in mind, I was just stunned to see how fast we went from the daily 3-4 bitcoin related articles to a big nothing burger. And you were nowhere to be seen as well, how come?

So what should the casual BTC hodler understand behind all of this kabuki?

Now coming back to you my dear mosley friend, nobody asked you so far the most obvious of questions; you claim that the price of BTC came up as a matter of adoption, S-curve etc. Now explain me why is this adoption not reflected in the either the number of bitcoin transactions, or even simpler the number of wallets? -I would expect the number of transactions and wallets to increase in the same fashion the price goes if everything would be honest, right? -Alas it's not the case:

Must I deduct from all of the above that all the transactions happened only at the exchange level to raise the price?

Furthermore, I do not have any access to any of the financials for these exchanges, but were they any indication that actual money was diverted into the circuit, or was it just a shell game between different altcoins in order to artificially raise prices?

You tell me. Please respond with arguments as well, that would be most appreciated.

I will anyway repost this next time you pop up on stage, you deserve some questioning.

 

 

 

tmosley's picture

>And you were nowhere to be seen as well, how come?

Are your retarded? I was posting about the flippening in articles completely unrelated to crypto because weekend Tyler REFUSED to post a fucking crypto article.

>Now explain me why is this adoption not reflected in the either the number of bitcoin transactions

Because the shitty BTC network has maxed out on the number of transactions they can process, which is a big part of why I have turned bearish on it.

>or even simpler the number of wallets

Nice goalseeked chart. https://blockchain.info/charts/n-unique-addresses?timespan=all

>but were they any indication that actual money was diverted into the circuit, or was it just a shell game between different altcoins in order to artificially raise prices

Coinbase is opening a hundred thousand new accounts a day. You think they are all shell accounts? Get real.

shitshitshit's picture

a hundred thousand accounts of people like my children throwing in 10-100 bucks at a time with 5% charges, not mentioning the credit rate if it happens to be drawn on their credit line, of course. That's not a huge cash infusion we're talking about here, we're just talking about the greater fools who think they can get rich quick, of course. But if it serves your goal to mention that as a tsunami then carry on.

In fine what it does is that it makes banks, and credit card companies in particular, especially wealthier...

 

 

crazytechnician's picture

You have not missed the boat. This thing is still on the ground floor. Boat still in port. Allocate 1 or 2 % to bitcoin , hedge 1:1 BTC / BCH. You will thank me a couple of years.

tmosley's picture

Might as well throw a :1 for BTG too, just in case. I will be hodling what I got for "free" and might buy a little more.

crazytechnician's picture

The only one with legs is BCH , it's blasting through transactions , no backlog and 1c fees. This is gonna rock. Legacy BTC is stuck with 180000 transactions in it.s mempool , and growing fast , many with 10 - 20 dollars fees. If that is supposed to be The Future of Money BlockstreamCore have seriously miscalculated.

KFBR392's picture

does anyone know a comparable exchange traded fund akin to GBTC for bitcoin cash? i agree this all still groundfloor for cryptos in general but it makes sense to hedge position on BITC with some Cash at this point. just dont want own directly. thoughts/options?