Bitcoin Cash Seemingly Bottoms

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Bitcoin Cash has had a brutal month, with the currency experiencing a continued decline since its all-time high of $900, falling to a low of $280 while its market cap has been halved to $5 billion.

The currency fell below ethereum’s price yesterday for the first time since it stabilized, while its trading volumes have increased to just above $400 million.

Bitcoin Cash’s brutal month.

Some of this decline is explained by the Emergency Difficulty Adjustment (EDA) mechanism, which adds a new component to mining difficulty.

On top of adjusting up or down every two weeks, it also adjust down if no blocks are mined for a certain number of hours.

This has led to high volatility at the protocol level, with sometimes 50 blocks found in an hour while other times none are found for hours, making the peer to peer payment system operate not very smoothly.

But a second dimension appears to have been added, the segwit2x fork. Although it may have been just a coincidence, Bitcoin Cash was the first to significantly respond towards segwit2x movements.

Some even say they’ll go back to bitcoin if the segwit2x upgrade succeeds, but there might be supporters of a non-segwit bitcoin. However, the currency needs some protocol level stability.

There are suggestions new algorithms might be proposed, but it’s unclear when they would be implemented and in particular whether that would be before or after November 18th.

That’s when the bitcoin upgrade or the potentially chain-split fork is to occur, with miners nearly unanimously currently supporting it.

While businesses have not yet made a sufficient number of statements to reasonably judge their level of support. The two major statements that have been made are somewhat contradictory.

Bitfinex has stated they are to label 1x as BTC even if it is the minority chain while Xapo has stated they are to label the chain with the most accumulated difficulty as BTC.

That has potential for plenty of confusion if a minority chain does manage to operate without protocol level adjustments. Once such adjustments are required, it might be the case even the strongest supporters would have to concede the name.

But, it’s still a bit too early to reasonably estimate how events are to unfold with more than four weeks left to go.

 

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