BITCOIN DROPS LIKE A ROCK AHEAD OF BITCOIN CASH FORKING
Since September, the price of Bitcoin has mostly been stable. The volatility reduced in what many experts believed was the calm before the storm. The storm came yesterday, when Bitcoin had the sharpest decline since February this year. The price declined by more than 15% to a low of $5430. Bitcoin’s price has dropped by more than 70% from the YTD high. Other cryptocurrencies like Ether, Litecoin, and Ripple dropped by more than 15% as well.
The decline that happened overnight was associated with a new Bitcoin Cash fork. Many Bitcoin holders sold their holdings as they tried to raise cash to buy Bitcoin Cash when it splits. They anticipate that the value of the new coins will increase. When the split happens, the two new Bitcoin Cash will become competitors. In addition, the process of mining the new currency will be relatively easy before the hash rates increases.
Last year, Bitcoin Cash was created by the forking of Bitcoin. This led to a new forking craze in which a number of software development teams started creating new money by changing the original computer code. After the forking happens today, Bitcoin Cash will be led by Craig Wright while another rival faction will lead the new version of Bitcoin Cash.
All these issues raise serious concerns about the relevance of the cryptocurrency world with investors worrying what will happen if the forking craze continues. In other words, they are concerned about the value of their currencies when a new one is created. Bitcoin’s current price is the lowest it has been since last year. In an article last week, Bloomberg Intelligence warned that declines below $5900 could see the price drop to $2000.
The BTC/USD pair’s current price is below all the main moving averages while the RSI is currently at 10. While this could be viewed as a sign to buy, the low RSI is also an indicator of how strong the bearish momentum is. Therefore, the pair could remain within these levels or even fall lower as forking happens.