The price surge in Bitcoin Cash over the last few days has come as a surprise to many in the community predicting its certain death. One of the most divisive projects in the cryptocurrency space, BCC’s unstable hash rate and unpredictable block confirmation times epitomized the price drop from a post-fork high of $970 USD to the recent low point in the high 200’s.
Bitcoin Cash Is Back
But suddenly Bitcoin Cash is back, and it’s booming.
Since October 9th it has risen from $295 to a high of around $520 yesterday, an increase of over 75 percent. At press time, it had fallen back to $464.
What is behind the sudden reversal in the seemingly-assured slide into oblivion? How is Bitcoin’s “minority chain” sustaining itself?
From looking at the chart below, we can see that at times BCC (a.k.a. BCH, in green) has correlated with BTC (red) and at times moved in the opposite direction:
For much of the last month it was travelling down as Bitcoin made new ATHs:
Then, after a period of range bound movement and low liquidity, BCC started seeing an influx of hash power and the stage was set for an increase.
The big miners are parked on Bitcoin Cash whenever the difficulty is low. They'll accumulate for a while then try to pump it even more.
— CryptoWaves (@CryptoWaves) October 28, 2017
The narrative behind this is: with the upcoming SegWit2X fork getting ever closer, users are hedging into Bitcoin Cash as a form of insurance.
The result has been a large price increase over the last few days:
Yet in the court of public opinion, there’s to be no middle ground in the way Bitcoin Cash is portrayed. It has become an ideological battlefield and representative of the scaling debate that has been ongoing within the Bitcoin community for at least three years.
Regardless of the technicals merit of each approach — restricted block sizes with off-chain scaling or increased block sizes with more on-chain scaling — the war created a bitter divide that has played out in both the creation and price of Bitcoin Cash.
Bitcoin Cash and the Roger Ver Factor
As is the case in all markets, however, behavior is fractal. When the prevailing sentiment points overwhelmingly bearish, there is often a reaction in the opposite direction. In a binary system like crypto, in order for the market maker in BCC to profit, his bets must prevail against those of the majority.
After all, if the majority and the market maker were all betting in the same direction, who would be there to pay them off by betting against them?
Many users sold out because of their distaste for Bitcoin Cash proponent Roger Ver. As one of the earliest Bitcoiners, Ver has divided the community with his push for bigger blocks in opposition to the majority of the Core development group.
Ver believes the Core group has been infiltrated and corrupted by Blockstream, and that the main Bitcoin discussion forums (BitcoinTalk and r/Bitcoin) have been censoring his and other big blockers opinions. He further believes that increasing the blocksize is strictly in keeping with Satoshi’s original vision.
— Roger Ver (@rogerkver) October 17, 2017
The use of the infamous Satoshi quote here is either revealing or the most ironic statement of all time, considering that in the years since Satoshi himself implemented the 1MB block limit (intended to be temporary but without a time limit), Roger was regarded as Bitcoin’s biggest advocate.
His detractors point out his perceived looseness with the truth (something that has been leveled at both sides), and point out that now that he believes the block size should be increased, Ver is no longer a proponent of the current Bitcoin protocol but promotes the Bitcoin Cash implementation. Ver has publicized this view on his website where BCC is promoted as the true BTC.
Despite this, and despite the game theory, economic and technical arguments, while Bitcoin Cash has had its problems, it seems that in the search for a hedge against the uncertainty of the upcoming Segwit2X fork, BCC is benefitting from finding itself as an unlikely place to ride out the storm.
Do you agree or disagree with this analysis? Let’s hear your thoughts.
Images via Jon Southurst
The ‘Bitcoin Cash’ section at Bitsonline is sponsored by Bitcoin Cash. In hopes of bringing cryptocurrency to the masses, Bitcoin Cash has set out to provide a digital currency with on-chain scalability, so everyone can use the blockchain affordably. Learn more at BitcoinCash.org.