Over the past 12 hours, more than $8 billion was wiped out from the crypto market, as several major digital assets including Bitcoin Cash (BCH) and Stellar (XLM) suffered.
For the first time in the past ten days, the price of BCH has dropped below the $500 mark to $480. Within the past week, after securing a monthly high at $630, BCH has dropped by more than 24.4 percent.
Prior to a hard fork, especially a contentious hard fork in which a chain split is almost guaranteed, investors tend to buy a significant amount of the cryptocurrency that is expected to fork. When the chain splits, investors receive both cryptocurrencies from the hard fork, as seen in the case of Bitcoin and Bitcoin Cash in August 2017.
Hence, prior to the scheduled November 15 hard fork, the price of Bitcoin Cash increased by more than 50 percent, as Bitcoin Cash SV, a camp led by Craig Steven Wright (CSW), Coingeek, and Calvin Ayre, announced its plans to hard fork.
Tomorrow, the Bitcoin Cash network hard forks. As such, a further increase in price was expected given that following the hard fork, BCH holders will be able to obtain BCH SV at a 1:1 ratio.
However, with one day left before the scheduled hard fork, BCH recorded a large drop of over seven percent and experienced one of its most intense sell-offs in recent months.
It is possible that the conflict between the Bitcoin SV camp and the Bitcoin Cash camp, which has become personal amongst the key figures involved primarily due to the threats made by CSW against developers and miners on the original Bitcoin Cash network, led investors to lose confidence in the short-term trend of the asset.
As CCN.com reported on November 9, CSW said:
“I will ensure that ANY miner passing DSV can be held liable (under the law of the UK, China and US, they can be) The end will be a drop in value for those using DSV And, I will help ensure those who lose claim against this act. The developers in ABC will be able to be held personally liable. Oh… I do have a Masters in Law on just this area.”
The short-term downward price trend of BCH intensified as an increasing number of traders started to short BCH on BitMEX. If BCH had rebounded swiftly, a short squeeze could have led to a speedy recovery. But, a lack of momentum and the sheer intensity of the sell-off led BCH to lose nearly 30 percent of its value within the past eight to nine days.
Bitcoin SV has taken over Bitcoin Cash on Poloniex, one of the few exchanges allowing early margin trading on the yet to be released SV.
The short-term trend of BCH mostly depends on the ability of the market to initiate a corrective rally in the next 12 to 24 hours, but it is unlikely under current market conditions.
Featured image from Shutterstock.
Last modified: May 20, 2020 2:25 PM UTC