The price slide follows sizable gains during the previous week as market participants bought up bitcoin cash heading into the event, which took place on Thursday.
Hard forks occur when developers revise the protocol for a cryptocurrency in order to fix security risks, add functionality or even reverse transactions. When there is disagreement about the future direction of a crypto, however, a hard fork can lead to the creation of two different currencies. Bitcoin cash itself, for example, is a spinoff of the world’s first cryptocurrency, bitcoin (BTC).
Bitcoin cash’s hard fork took place Thursday and split it into two digital currencies: bitcoin ABC (core bitcoin cash) and bitcoin SV (Satoshi’s vision). Many major bitcoin and cryptocurrency exchanges, including Binance, Coinbase and Bitfinex, supported the hard fork, and investors who own bitcoin cash received the newly created currency at a 1-to-1 ratio.
Gina Heng, co-founder and CEO of the Marvelstone Group, a private investment group based in Singapore, and founder of Miss Kaya, a money management tool for women, points to possible short-term volatility for the two currencies, though she doesn’t believe the overall market will see significant price moves. “BTC and major cryptocurrency prices are still moving within ranges,” she tells ThirtyK.
At about 4 p.m. EST Friday bitcoin cash was down 27.9 percent for the week at $408.57. Earlier in the week it fell almost as low as $270. Ripple (XRP) was down 6.0 percent at 47 cents, while ether (ETH) was down 17.5 percent for the week to $175.50. Bitcoin fell below the key $6,000 level, plunging to nearly $5,300 Thursday. Friday afternoon it was down 13.6 percent for the week at $5,567.62. Prices in the cryptocurrency market skyrocketed in December 2017, only to fall into the spring and early summer. Bitcoin climbed to nearly $20,000 late last year.
Hard Fork Dominates
Bitcoin cash’s fork prompted a degree of drama in the cryptoworld over the last few weeks, given competing hard fork proposals from Bitcoin ABC, the most used bitcoin cash client, and nChain, which is supported by U.S.-based Coingeek.
Early bitcoin adopter and Bitcoin.com owner Roger Ver, who publicly backed Bitcoin ABC’s vision for bitcoin cash, posted a YouTube video confronting self-described bitcoin creator and chief Craig Wright.
“The bitcoin cash fiasco had an impact on the overall market,” Jack Tatar, managing partner at Doyle Capital Management, tells ThirtyK. “The personalities involved created a little bit of a spectacle for crypto.”
Tatar said the market is at a juncture where it’s important to provide the investor community and the public at large with more quality information and education about the goings on in the crypto community. Perhaps, he said, the latest bitcoin cash hard fork demonstrated a need for a better hard fork governance model.
Looking past the noise, Tatar points to increased stability in a variety of projects as a positive. Recently, blockchain innovations company Factom announced it is working with Equator, a leading provider of residential loan default software and marketing solutions, on a mortgage-servicing solution.
“Sometimes efforts are drowned out by market events, but we have a little more stability in projects than we’ve had in the past,” Tatar said.
Tatar believes the market will see a bitcoin exchange-traded fund in the next 12 months, though unlikely in time for the new year. “As we get into 2019, I think regulators will feel more comfortable that these products can be provided to regular investors,” he said.
Once an ETF is approved in the U.S., Tatar adds, that may well set off a domino effect, with other countries following suit. “And then, it’s off to the races with the price of bitcoin,” he said.
The SEC now has a full set of commissioners, and the most recent appointee, Republican Elad Roisman, tends to favor deregulation and is crypto friendly, Miko Matsumura, Evercoin founder and general partner at Gumi Cryptos, tells ThirtyK. “So, we may see some movement there,” he says. “Though, the biggest concern that’s hard for the industry to correct is the fears they have around market manipulation.”
Centralized exchanges are part of the problem, and are making money in problematic ways, Matsumura adds. “Until we see a regulatory cleanup of the exchange market, we may find the market to be a bit slow,” he says. Also concerning, says Matsumura, is that all altcoins continue to track bitcoin. “This is definitely a sign of an unhealthy capital market that can’t differentiate between good and bad investments.”
Matsumura has a close watch on the security token space, which he says should add trillions of dollars to the total value of the crypto sphere. Security tokens are essentially blockchain-based versions of stocks or bonds, providing holders with a share of ownership in a company or asset, or with a promise to pay back capital. He expects to see more and more channels through which consumers can buy things with crypto, pointing to “some very big winners in that space going forward.”