Bitcoin has fallen by nearly $1,000 in the past few days, from a high of $3,000 to a low of $2,100, currently trading at around $2,400, an historical high.
The currency fell by more than 10% just yesterday, continuing a downward trend that started soon after ethereum reached more than 80% of bitcoin’s market cap.
The reason is probably because many bitcoiners may have started diversifying to eth, but ethereum is down too more than 10% today, reaching a low of $285 from an all-time high of $420, currently trading at around $340.
Ethereum has been experiencing a bull run for much of this summer, rising to new heights, but bitcoin seems to have dragged it down lower yesterday as the two currencies appear to have moved in sync.
The reason is not very clear because while ETH/BTC remains the most traded pair for bitcoin, it is in fourth position for ethereum with South Korea and even the dollar pair ranking higher, while CNY is not far behind.
It may be arbitrage as during fast price movements bots may go into play, taking advantage of any discrepancy between the BTC/USD, ETH/USD and the ETH/BTC pair.
That, however, often seems to be temporary as the eth/fiat pair regains grounds, with bitcoin having lost around 33% of its value while for eth its just 12-19%.
Not an insignificant amount, but seemingly less to do with eth and more to do with bitcoin which is facing a period of uncertainty as the scalability debate goes head to head on August the 1st.
A huge political campaign has been underway on the censored r/bitcoin forum pushing for a flag day soft-fork to bypass miners and activate segregated witnesses (segwit). Miners, in turn, have stated they will hardfork to increase maxblocksize.
The likely outcome is a split into two bitcoins as the community has failed to reconcile their differences, with claims and counterclaims over the brand name probable, while exchanges might cause greater confusion by listing different chains as BTC.
This uncertainty has seemingly dampened the mood in bitcoin as the market waits to see what exactly will happen, followed by a probable trading frenzy in August if the chains do split.
Then, we can expect both bitcoins to be listed, with the bitcoin market probably experiencing its most volatile period ever as speculators and investors decide which bitcoin should have higher value and therefore be dominant.
Many of them may simply run to safety, which in this case would probably be eth. So the currency may ride higher, but whether it will in fact do so remains to be seen.