Bitcoin Cash Watch: Five Factors Behind the Weekend Rally
Bitcoin Cash rose to a peak above $1,800, propped by Korean exchanges- but the whole picture of the rally is more complex.
Bitcoin Cash more than doubled in price before sliding back again 22% to around $1,300. There are several factors at play behind the rally.
- Simply a pump?
Cryptocurrencies are prone to suddenly attracting buying interest, spiking due to unrestrained volatility. The rally is unraveling now, with the asset sliding 12% in the past hour to $1,158.16. Such a picture shows that indeed, there was a pump-and-dump component to the rally, especially after trading on Bithumb halted for lack of liquidity after reaching a premium price above $2,500.
But despite the short-term movements, last weekend shined a bright spotlight on Bitcoin Cash, adding to the general interest.
- Bitcoin showed faults
In addition to a correction of up to 40% since the peak price of BTC at $7,800, Bitcoin had a rough weekend when it comes to transactions. Due to lowered hashing power and long block time of up to 15 minutes, the mempools clogged and the pending transactions, already peaking, doubled to more than 100,000.
This caused chaos and buying turned to BCC. Fees for Bitcoin rose beyond control and the Exodus wallet issued a warning.
- The Bitcoin Cash Difficulty Exploit
While miners may move to Bitcoin Cash for their own reasons, some of which are political, the main drive of miners is block rewards. And Bitcoin Cash delivered over the weekend. Due to a low difficulty, mining block time accelerated once again. However, in a few hours the difficulty adjusted downward and as of the time of writing the last block was discovered about 45 minutes ago.
It remains to be seen if the mining pools which flocked to Bitcoin Cash in the past day would remain in the conditions of higher difficulty, but for now mining seems to have slowed down and the hashing power of the Bitcoin network is still bigger.
At the moment, the Bitcoin original chain is 209% more profitable to mine, after a downward difficulty adjustment of 6.09%. But curiously, this has not caused an influx of miners, as block time is again 15 minutes and above and the total hashing power of the chain is still decreasing.
- The beginning of the flippening?
Bitcoin Cash did not get above $1,000 without preparation. While it relied on a lot of publicity, just like other altcoins, it seemed there was a shift in thinking after the revocation of the SegWit2X fork. But there is a gradual shift in thinking, as currently Bitcoin Cash is the only chain offering at least a temporary scaling solution.
For now, only the biggest evangelists have moved over all resources, most notably Roger Ver. It seems one of the larger Bitcoin wallets of Ver has been emptied, in addition to adding the Bitcoin.com resources to Bitcoin Cash mining.
- The hard fork of November 13
In 21 hours, the Bitcoin Cash network would go through a hard fork, a backward incompatible update to its difficulty adjustment algorithm. The aim of this update is to provide a smoother adjustment of difficulty and less disruptions in mining. At the moment, low difficulty sometimes leads to mining almost empty or empty blocks carrying no transactions.
Countdown: https://t.co/AwdEZzKoAk— Bitcoin Cash (@BITCOlNCASH) November 12, 2017
If your coins are on an Exchange, there is nothing you need to do. If your coins are in a Software Wallet, ensure you are running the latest version. pic.twitter.com/nlrRkcvIN1
The EDA update was provided by the Bitcoin ABC team, headed by a self-described "benevolent dictator" Amaury Sechet. This hard fork will not split the chain or issue new coins, but works as an upgrade.
Whatever happens in the next few months, we expect to see more signs of a tug-of-war behind the coins. While Bitcoin Cash claimed it is an altcoin with a different development trajectory, there is no stopping the idea that it may become the leading coin, while actively conquering some of the resources of Bitcoin.