Bitcoin, which had hit a record high of $7,879.06, traded more than seven percent lower Friday near $6,621, according to CoinDesk, thus marking its lowest since Nov. 1.
A development analyst and traders claim may have be huge bets on on its offshoot, bitcoin cash.
The offshoot digital currency surged more than 30 percent to its highest since Aug. 19, and was last trading near $876, according to CoinMarketCap.
Bitcoin cash split off from the original version of bitcoin in August as a minority group of developers decided to implement an upgrade in an effort to increase transaction speeds for the digital currency.
An alternative bitcoin upgrade proposal, SegWit2x, which initially had more developers behind it, was called off Wednesday due to waning support.
“You can see people playing back and forth between bitcoin and bitcoin cash trading depending on where they think near-term catalysts may be,” said Chris Burniske, author of Cryptoassets: The Innovative Investor’s Guide to Bitcoin and Beyond.
“It’s been a battle of investors versus traders that were stockpiling bitcoin to get their ‘bitcoin2x dividend.'”
Investors at the time of a bitcoin split technically receive equal amounts of the offshoot currency. Disagreements over upgrade proposals have caused uncertainty over the future of bitcoin, but some traders had been buying bitcoin ahead of splits in order to benefit from a payout of a new digital currency and a potential relief rally in bitcoin following the split.
Creating bitcoin cash through the “mining” process was 13.6 percent more profitable than mining bitcoin, according to data on Coin Dance’s website.
Bitcoin’s story has been a faery tale. Its price has gone up 700 percent over the past 12 months, and 1,800 percent in the past 24 months. At over $5,000 (as of October 12), a single unit of the virtual currency is now worth more than three times an ounce of gold.
Though some Bitcoin evangelists see it going far higher in the next few years,” Kenneth Rogoff, professor of economics and public policy at Harvard University and recipient of the 2011 Deutsche Bank Prize in financial economics, in an article published in the worldeconomicforum.org., said the price of bitcoin would ultimately collapse in the long run.
While acknowledging that the cryptocurrency Bitcoin is the biggest bubble in the world today, or a great investment bet on the cutting edge of new-age financial technology, he said his best guess is that in the long run, the technology will thrive, but that the price of Bitcoin will collapse.
Economy September 23, 2020