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Bitcoin Price Struggles to Recover Beyond $5,500; Bitcoin Gold Lacks Community Support

Last Updated March 4, 2021 5:00 PM
Joseph Young
Last Updated March 4, 2021 5:00 PM

For the past two days, the bitcoin price has struggled to recover beyond $5,500, after surging above $6,000. Analysts have attributed to the recent decline in the price of bitcoin to the upcoming Bitcoin Gold hard fork, and the lack of support from the community.

Earlier today, on October 25, the price of bitcoin dipped below $5,400, dropping to $5,365. Since then, within a relatively short period, the price of bitcoin has rebounded to $5,500, but still, due to the Bitcoin Gold fork that is set to occur prior to the SegWit2x hard fork on November 16, the bitcoin price will likely remain in the $5,500 region, at least until the Bitcoin Gold development team adds strong replay protection.

Bitcoin Gold and its Negative Impact on Bitcoin Price

The Bitcoin Gold hard fork was abruptly introduced by Chinese miner Jack Liao earlier this month. Essentially, the long-term vision of Liao and the Bitcoin Gold team is to close the gap between ASIC mining and GPU / CPU mining, to decentralize the mining industry.

But, the bitcoin and cryptocurrency community criticized the BItcoin Gold hard fork, primarily because of its unoriginal and impractical idea, and also due to its plans to premine the cryptocurrency. In the cryptocurrency market, the concept of premining a cryptocurrency before its launch is not welcomed by investors, traders, users, and developers, because it leads to a centralization of funds and supply before the launch. Major cryptocurrencies like Dash were criticized for that reason in the past.

Additionally, the community has been fundamentally opposed to the Bitcoin Gold fork considering its lack of replay protection. Without it, bitcoin investors and holders prior to the fork will not be able to receive Bitcoin Gold in a 1:1 ratio, as it would danger existing bitcoins. As the Trezor development team explained: 

“Bitcoin Gold’s codebase is, at the moment of the writing, incomplete. Most importantly, it lacks replay protection. For this reason, TREZOR Wallet will not support Bitcoin Gold yet, as it would endanger your bitcoins.  As Bitcoin Gold is a fork of Bitcoin, the transaction format, the signatures, etc. are the same. A transaction on one chain could be copied to the other chain and will be valid, possibly leading to unintended loss of coins.”

Consequently, as highly regarded bitcoin developer Jimmy Song explained, bitcoin investors have started to sell their holdings and temporarily move on to alternative cryptocurrencies (altcoins) to avoid the Bitcoin Gold hard fork.

Short-Term Price Trend

The Bitcoin Gold development team has announced that they intend to integrate strong replay protection prior to its hard fork. But, as leading cryptocurrency exchanges such as Bittrex noted, the codebase itself is not ready, and most of the Bitcoin Gold codebase has not been tested and audited.

Unless the Bitcoin Gold development team adds replay protection in the upcoming days, the price of bitcoin will likely suffer as a direct result. While analysts like Tuur Demeester predicted a similar trend with SegWit2x in mid-November, since SegWit2x has replay protection, it is likely that a sell-off will not occur.

Featured image from Shutterstock.