A bold statement but I think we can all relate: What happened with Bitcoin Cash on Friday was unusual. Over the course of two days, its price has doubled. Market reaction? Buy buy buy. Up to the point where, on November 12th, the Bitcoin Cash price reached $2400. And if that’s not strange enough, within 1 hour the price dropped by a thousand, and since then it has fluctuated with high margins and a downward trend.
The first signs were a massive price increase of almost $400, which turned out to be only a slice of the cake. But a strong upward trend confirms that BCH holders have reasons to celebrate.
Even though Bitcoin Cash’s price had risen by the end of the day to $1400, the overall course of the day was pleasantly smooth. Maybe some Bitcoin Cash holders decided to celebrate.
Even Vitalik Buterin decided to congratulate the Bitcoin Cash team on the success.
— Vitalik Buterin (@VitalikButerin) November 12, 2017
So here comes the first WTF moment. On 12th Nov, just as Bitcoin Cash reached a new record high, it dropped tremendously. At 07:30 UTC the cryptocurrency price was almost $2500 and not even an hour later, at 08:20 UTC the price was below $1400. And within those 50 minutes, the market cap dropped by almost 50% ($19 billion!). We haven’t seen such drop in a while. As mentioned, the Bitcoin Cash price continues to fluctuate with high margins and a downward trend. It seems that it all happened regardless of the fork, but we’ll continue watching BCH closely, and in a separate article, comment on the fork and its effects.
Bitcoin Cash aftermath
Due to this abnormal growth, Bitcoin Cash will be a hot topic for some time. Sunday 12th November was the most crucial day in this streak, at least unless something bigger happens in the next few days. Despite its massive rise and fall, Bitcoin Cash has stolen a lot of market cap from other cryptocurrencies, including Bitcoin. Such market value drain is not something desirable, especially because of the possible reasons for such abnormal growth…
SegWit2x to pump Bitcoin Cash?
Members of the cryptocommunity on Reddit agree that Bitcoin Cash price jump was a textbook example of pump and dump scheme. One theory suggests that the SegWit2x cancellation was a part of pumping the BCH price. Some are of the opinion that SegWit2x was never even supposed to happen, because its only role was to pump BCH. The team behind SegWit2x and ardent BCH supporters have basically played every single weak handed ‘hodler’ in Bitcoin. When BTC rose to new highs after the hard fork was cancelled, these people took their profits and used them to pump Bitcoin Cash. One user wrote:
They claim that Bitcoin Cash will actually replace BTC and take over its name, effectively becoming the new bitcoin. For this to happen, each exchange would have to unanimously agree on what the ‘real bitcoin’ is and the first exchange to switch their definition of bitcoin to BCH would be at least HALVING their customer base/trade volume instantly.
Bitcoin Cash, or how a group of people can turn the market upside down
The situation shows how vulnerable the market is. Roger Ver, also known as ‘Bitcoin Jesus’, is conducting a campaign promoting Bitcoin Cash as the real Bitcoin. Statements like this by influencers have a massive impact on the market. People started buying Bitcoin Cash the moment it increased in price, not only because they see a quick profit, but because the influencer says that Bitcoin Cash is better than good ol’ Bitcoin.
And then comes the coin supply part.
It seems that most of BCH’s supply is controlled by people with a lot of Bitcoin Cash in their wallets. Few people having control of the supply can change the market in an unusual way, such as the one we’ve witnessed. As witnesses of this price jump, we can conclude that Bitcoin Cash is much more centralized in terms of people who control it.
Beware of suspicious price jumps
There’s definitely too much happening behind closed doors around both SegWit2x and Bitcoin Cash – it seems impossible that such a growth in market capitalization was caused by the community. Very likely it was a setup by a few players to pump the BCH. This is extremely dangerous, because a few people who don’t follow the ethical market rules can manipulate the market. Furthermore, it’s impossible to predict when and where they are going to affect the market.