Bitcoin is on the Bloomberg Markets main page again. This is yet another sign of the currency becoming yet another asset class. In the article, we read:
Bitcoin is looking increasingly likely to splinter off again in November, creating a third version of the world’s largest cryptocurrency as miners and developers pursue separate visions to scale its rapidly growing marketplace.
Major industry players, including the bitcoin investor Roger Ver known as “Bitcoin Jesus” for proselytizing on behalf of the digital currency, say consensus between opposing camps looked increasingly unlikely. That opinion was echoed by some of the biggest mining pool operators and also programmers -- known as “Core” developers -- who were instrumental to developing the infrastructure of the original bitcoin network.
In recent weeks, a group of miners -- people who crunch complex math problems to generate and transact the digital currency -- split off from the legacy bitcoin to use a new version known as Bitcoin Cash. Ver is moving some of his funds into the new offshoot as he anticipates what would be the second split of the currency of 2017. Ver admits he could potentially benefit from such a schism as more coins are created.
The fact that a mainstream media outlet like Bloomberg is starting to cover Bitcoin and some of its technicalities is definitely a sign that the interest is near its all-time high. Actually, the fact that we are seeing increasingly more stories on Bitcoin in mainstream media after the currency peaked (at least temporarily) is a confirmation that a top might be in. This, of course, is not certain (nothing in the market is). As for the next possible split – we don’t think it is a game-changer for Bitcoin. Previous splits were not and even the recent, highly-publicized creation of Bitcoin Cash doesn’t seem to have made all that much impact (in line with our previous hints). As long as the traditional version of Bitcoin remains the largest one in terms of market cap, it seems other versions of the Blockchain are not likely to change the Bitcoin space. We would have to see more dramatic events here.
For now, let’s focus on the charts.
On BitStamp, we saw relatively significant appreciation on Monday, followed by weaker depreciation. All of this on relatively low volume. Recall our recent comments:
(...) it transpired that in the short term the market did turn around. Quite interestingly, Bitcoin erased almost exactly 50% of the preceding rally before bouncing slightly to the upside from this level. This is similar to what we saw at the previous downturn. It might just be the case that the 50% level right now is the trigger that might be the beginning of the next big move to the downside. Alternatively, a lack of breakdown below this level might be read as a bullish signal.