Market Shakeout
Why Bitcoin Cash hardfork is one of the most important and noteworthy events in the crypto industry's recent history
November 15 is a scheduled date for the Bitcoin Cash network update, which will result in the currency splitting into two forks – Bitcoin ABC and Bitcoin SV. This is the biggest hardfork of the recent months. Although the imminent event is extremely exciting and advantageous for most industry players, it is also capable of revamping the market, which has been hanging in the "red" zone for a while.
Bitcoin Cash is the fourth biggest cryptocurrency in terms of capitalization. This is a very large asset, and no market participant worth his salt can overlook the event. As soon as the announcement of the hardfork was out, the BCH's volatility immediately went up, with its value jumping nearly 40%. For today's market, in which all leading cryptocurrencies have been on a negative trend for awhile, this is an impressive number.
Usually, when a developer or miner team is unable to come to an agreement about the future development of the network and deliberately breaks it into several parts, it does not bode well for the project. But this is not the case with Bitcoin Cash hardfork.
First, it may be hugely beneficial to all major holders of Bitcoin Cash, because they may be able to grow their holdings by 50-70% on speculation alone. Any major sales of this currency now outside of the fork can singlehandedly crash its value. When a large number of new players are lured into the market by the hot news, any insidious play involving currency trade may be offset by the rise in its liquidity.
Second, this hardfork is also quite useful for large crypto exchanges, such as Binance or Bitfinex. Their trade volume dropped significantly as a result of the crisis. Moreover, most crypto exchanges have a significant number of so-called "dead" accounts, i.e. accounts belonging to users who no longer trade at the exchange, left over from the "fat" times. Such an important and widely broadcast event as a hardfork is a great opportunity to rope these players back into the market, thereby increasing the trade volume.
Third and final factor is that the publicity around this hardfork aims at attracting as many everyday folk as possible, who would be interested in exchanging their available cash for Bitcoin Cash, obtaining two new cryptocurrencies and attempting to make a profit. This is a brilliant strategy, which may indeed bring to the market mass rather than professional audience.
So what do we have in the final analysis? A dramatic increase in market players' activity, a powerful rise in one of the leading cryptocurrencies' liquidity, an impressive upswing in its trade, and high price volatility of the new digital assets over the 3-4 weeks after the fork. And of course, at the end of the day someone will have made yet another billion.
So overall, this is a very positive and much-needed shakeup for the market which has been stagnating and shifting gears for quite some time.
