Since achieving a new all-time high above $4,500, bitcoin price has recorded four minor corrections. Earlier today, on August 22, bitcoin price fell to $3,800 as the market and investors started to fear for a sell-off prior to the scheduled November SegWit2x hard fork supported by a few major companies including BitPay.
In July, when bitcoin price experienced a minor correction and dropped by around $300, analysts attributed the decline in the value of bitcoin to the imminence of the August 1 Bitcoin Cash (BCH) hard fork. At the time, ViaBTC and Bitmain hinted the possibility of the BCH hard fork and the market immediately reacted to the announcement of Bitmain with a panic sell-off.
However, Andreas Antonopoulos, highly respected bitcoin and security expert, reassured the community that the BCH hard fork announcement was only one of many factors that led to the correction. He explained amidst rapid surge in value, bitcoin and the market have to correct in order to demonstrate more organic and natural growth.
“The reason bitcoin price is dropping is the rapid 1500 percent rise in 2 years, especially the last 3 months. The scaling debate is just a trigger. Relax,” said Antonopoulos in July.
A similar analysis can be provided to explain the minor correction of bitcoin earlier today. The scaling debate and the proposal of a SegWit2x was one of many factors that made the market and investors less confident in bitcoin’s recent rally. The fact is, bitcoin price has surged substantially within a 30-day period, rising from $2,490 to $4,500 within a single month. That is, nearly a two-fold increase since late July.
More importantly, as explained by CCN in a previous coverage, upon achieving new all-time highs, historically, bitcoin price has always endured a minor price correction. However, it is important to note that after experiencing a minor correction, bitcoin moved on to achieve new all-time highs as the market and investors seek for new opportunities.
Most analysts including Mike Kayamori, CEO of Japan-based bitcoin exchange Quoine, see bitcoin price increasing at a rapid rate in the mid-term, especially after the activation of the Bitcoin Core development team’s scaling solution and transaction malleability fix Segregated Witness (SegWit). This week, SegWit is expected to active on the bitcoin network and upon the completion of the update, positive media coverage will trigger increase in demand towards bitcoin.
One hurdle which will lead to a major correction is the execution of the November SegWit2x hard fork, if it is pursued. Currently, some major companies including BitPay, arguably the largest bitcoin payment processor for merchants, are actively advocating for the activation of SegWit2x. It is likely that many companies from the Digital Currency Group-led consortium of 57 companies will also signal the execution of SegWit2x hard fork.
Hence, in November, bitcoin price will likely suffer from a major price correction and today’s decline in bitcoin price could have been triggered by investors fearing yet another hard fork within a two-month period.
Provoked by the correction of bitcoin price, most cryptocurrencies in the market recorded substantial decline in value. Ethereum, which was close to reaching $350 as reported by CCN on August 21, dropped to $310 while other major cryptocurrencies such as Litecoin and NEM also demonstrated a slight setback.
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Last modified: May 21, 2020 9:36 AM