The cryptocurrency slump continues, with the bitcoin price falling below $2,000 USD on Coinbase for the first time since May 2017. And at that time, it was on the way up. What’s causing it, and what’s the best response?
The bitcoin price has been on a downward trend since the first week of July, with particularly sharp drops on the 10th and 14th. It’s possible the downturn is a signal investors are converting their bitcoin back to fiat, in anticipation of blockchain turmoil at the end of July.
At press time other bitcoin price averages, like CoinMarketCap, are barely clinging to above-$2K levels. A significant number like $2,000 represents a psychological “resistance” point or floor — once broken, it could see panic selling and prices tumbling even further.
Protocol Battles the Most Likely Cause
There hasn’t been any one news story to crash BTC. But August 2017 represents a potential do-or-die moment in the battle for Bitcoin’s soul. The main issue on 1st of August will be whether Bitcoin chooses segregated witness (SegWit) transactions or not. But they key issue is how it gets done.
Much has been written about this issue already, with the BIP 148/UASF supporters lining up against the so-called “New York Agreement” crowd. Both support SegWit in some form but the latter project includes a potential hard fork to increase transaction block sizes at a later date.
There are additional unknown quantities, such as the Bitmain-sponsored user-activated hard fork (UAHF) which aims to stop the UASF, and other influential groups that would prefer no SegWit at all. All these factors have the potential, if not the likelihood, to split Bitcoin in two.
So What Should You Do About It?
One thing’s for certain: if Bitcoin does fork, you want to have complete control over your funds. That means two things: (a) move it off exchanges and into a wallet where you hold the keys; or (b) sell it.
Many appear to be choosing option B. That’s safer if a fork, or the uncertainty alone, crashes the bitcoin price even further. On the other hand, if you hold all your BTC and it does fork, you have two different currencies — and the potential that one or both could be even more valuable in future. Or a lot less valuable… and there’s the gamble.
What about altcoins, you ask? The scene isn’t much better there, with nearly everything flashing red this month. There aren’t really any safe havens there, and it’s possible their price trends still mirror bitcoin’s.
This isn’t investment advice and in the end, no-one can give you any that’s guaranteed to succeed. Bitcoin and cryptocurrency are in unprecedented territory in 2017. Bitcoin is often called “Antifragile” — if it emerges from the coming months with minimal disruption, it will likely be stronger in future. On the other hand, disruption and fear could drive new investors away.
What will you do with your BTC? Let’s hear your thoughts.
Images via Pixabay, Coinbase