It turns out it wasn’t your average “sell the news” event.
While bitcoin set a new all-time high of $7,879 in the aftermath of affirmation a controversial software proposal had been scrapped, its price fell just as quickly, erasing gains to hit a low of $7,070. But for analysts, the $1,000 range was a case of bitcoin’s traders pricing in complex news: a group of miners and businesses would no longer seek to update bitcoin’s software or otherwise form their own cryptocurrency.
In this way, market observers admitted the charts showcased something that hasn’t been seen since September when China moved to ban ICOs and shutter its crypto exchanges – an unexpected shock.
As profiled by CoinDesk, the software proposal called Segwit2x, had been expected to be introduced to the network in mid-November, and many new buyers were said to have been allocating capital into bitcoin in anticipation of a split, thinking new coins would be created.
Yet, with the prospect of a quick dividend off the table, a look at cryptocurrency pricing service CoinMarketCap reveals a sea of assets in the green, as traders moved elsewhere in the market.
“Everyone was selling alts [alternative cryptocurrencies] and buying BTC. Now we are unwinding that,” said BTC VIX, the organizer of bitcoin trading group Whale Club.
Others, like Nejc Kodric, CEO of cryptocurrency exchange Bitstamp, noted it appears the news resulted in dissatisfaction for those thinking they could win big with a quick purchase before a split.
Kodric told CoinDesk:
“I think 2x was a big cloud of uncertainty which now went away … some like it, some were just in it for the airdrop.”
Others suggest it simply could have been the case that any development in the market was enough to spook new buyers.
Driven to bitcoin by its now nearly 700 percent gains on the year (or the news that major derivatives companies are looking to the market to launch new products), they simply may have lacked the ability to make a strong determination of how they felt about the event.
Such a view was put forward by Tim Enneking, managing director of the hedge fund Crypto Asset Management.
“I don’t think most people understood enough about the fork to understand the implications,” he said.
The beneficiaries?
Still, with the market rally cooled, there were also attempts to determine how the news could reshape the relationships between available blockchains with publicly traded tokens.
Amos Meiri, CEO of Colu, a startup seeking to encourage the business adoption of local cryptocurrencies, noted the decision is likely to push startups that were inclined toward the Segwit2x proposal, to other options.
Still, even while he was against the measure, Meiri acknowledged that, for many of his bitcoin business peers, the scrapping of further Segwit2x scaling is cause for concern for which those businesses could actively seek other solutions.
For instance, on Twitter, there was talk about what the move could mean for litecoin and bitcoin cash, both blockchain communities that appear to define their protocol as a vehicle for peer-to-peer payments, though neither rose very much on the day. Bitcoin cash, created after an August fork of the bitcoin blockchain was down roughly 5 percent, while litecoin, which launched in 2012 to offer merchants faster payments, was up just 0.21 percent.
However, there are those who believe these cryptocurrencies may soon become more valuable to a new group of users disenfranchised with the state of bitcoin.
Jake Smith, manager of Bitcoin.com, an interactive web portal for cryptocurrency, called today’s events “great news for bitcoin cash.”
“Businesses will start flipping. High fees hurting a lot of businesses,” he continued.
As such, the statements set up for what could be further price discovery in the market ahead.
Ping pong ball image via Shutterstock.