Bitcoin Monday defies skeptics who had predicted its free fall following huge bets on its offshoot, bitcoin cash as it recovers more than $1,000 after losing almost a third of its value in less than four days with traders buying back into the volatile cryptocurrency.
The cryptocurrency tumbled in the second half of last week, falling as low as $5,555 on the Luxembourg-based Bitstamp exchange Sunday, a slide of almost 30 percent from a record high just shy of $7,900 Wednesday.
On the other hand, the offshoot digital currency surged more than 30 percent to its highest since Aug. 19, and was last trading near $876, according to CoinMarketCap.
It however surged Monday, trading up more than 14 percent on the day at $6,718, though that was still more than $1,000 less than last week’s record high.
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.
Market-watchers said bitcoin fall had been driven by a decision on Wednesday to abandon a planned software upgrade that could have split the cryptocurrency in a so-called “fork” – a move that had initially had a positive impact on the digital coin, sending it to a record high of $7,888 on the view that this marked a resolution of a long-term dispute.
But some were disappointed that “Segwit2x” fork had been abandoned. It would have increased the capacity of the “blocks” transactions are processed in, thereby reducing competition to get payments processed and lowering transaction fees.
Consequently, analysts said, some of those who see low fees as important to the future of bitcoin were selling it for a clone called Bitcoin Cash that spun off from the original in August. Its block sizes are larger, and therefore transaction fees are lower.
Bitcoin Cash tripled in value at the end of the week as bitcoin slid, reaching an all-time high just below $2,000 Sunday and briefly overtaking Ethereum as the world’s second-biggest cryptocurrency.
But traders bought back into the original bitcoin Monday, sending Bitcoin Cash plummeting. It was trading down over 30 percent on the day at around $1,097, according to industry website Coinmarketcap.
“Bitcoin and Bitcoin Cash will co-exist and serve different use cases, just like Bitcoin and Ethereum. It’s not a zero sum game,” bitcoin and security expert Andreas Antopolous said in a post on Twitter.
Bitcoin is up more than 500 percent so far this year.
Frontpage September 10, 2018