After demonstrating a rapid surge in value in the past three days, the Bitcoin price has recorded a slight correction, decreasing from over $4,900 to $4,780.
Despite the correction, since October 8, within a span of three days, the Bitcoin price has increased from $4,450 to $4,780, sustaining strong upward momentum as a result of growing confidence from investors and traders over Bitcoin’s short and mid-term growth.
Possible Factors For Correction
The Bitcoin price has surged drastically over the past three days, from $4,450 to $4,980, recording a $530 increase. Normally, when the price of Bitcoin increases by over 10 percent, it tends to correct its short-term surge, providing a more stable platform to build momentum and achieve new highs.
In the upcoming days, the Bitcoin price will likely recover from its recent correction to above the $5,000 mark due to the upcoming SegWit2x hard fork in November.
Earlier this week, Bitcoin analyst and investor Tuur Demeester emphasized the decline in support of SegWit2x as a driving factor for the short-term price trend of Bitcoin. He noted that if more users, investors, the market, and businesses oppose the SegWit2x hard fork in November and the likelihood of the original Bitcoin blockchain remaining as the majority chain increases, the price of Bitcoin would likely surge in the short-term.
But, the rise in demand for Bitcoin can also be attributed to the hard fork execution of SegWit2x in November because in order for investors to obtain SegWit2x coins, which leading Bitcoin wallets and exchanges including Coinbase and Bitfinex will list as B2X, investors need to own Bitcoin prior to the SegWit2x fork.
While the replay protection implemented by the SegWit2x has been highly controversial–Jameson Lopp, the lead engineer for BitGo, went as far to describe it as a type of attack on Bitcoin–SegWit2x has implemented opt-in replay protection that would allow Bitcoin investors to be credited with SegWit2x coins or B2X tokens subsequent to the fork.
As Bitcoin developer and Paxos principal architect Jimmy Song explained:
“Segwit2x developers feel that they are going to be the majority chain after the hard fork. As such, they want all current wallets that exist in the Bitcoin ecosystem to be compatible with 2x and not require upgrades. That is, wallets and services won’t need to upgrade their software with opt-in replay protection. Their view is that strong replay protection would then cause a bigger split in the ecosystem than needs to be.”
In the short-term, the SegWit2x hard fork in November is beneficial for the price trend of Bitcoin because investors that either oppose or support the hard fork will still opt to purchase more Bitcoin for different reasons; investors that are confident the original Bitcoin blockchain would remain as the majority chain would invest in Bitcoin to hold the digital currency as it increases in value, while investors that are confident SegWit2x would evolve into a majority chain would also invest in Bitcoin to gain immediate access to SegWit2x coins after the fork.
Additionally, if the US, Japanese, and South Korean Bitcoin markets continue to demonstrate increase in demand for Bitcoin, and if the Russian government moves to licensing Bitcoin exchanges and regulating cryptocurrency trading activities as Russian President Vladimir Putin hinted this week, the price of Bitcoin could increase in the short-term.
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Last modified: May 21, 2020 9:12 AM UTC