As you already know, the market has been in a bit of a downturn. Bitcoin has dropped over 13% ($2,600 to $2,250) in the last four days, with other alt coins dropping even more (LTC -17%, DASH -23%, XRP 30%, ETH 31%). There are many reasons surrounding this, with the main culprit being the Bitcoin hard fork on August 1st.
Bitcoin Hard Fork
The main problem with Bitcoin right now is the transaction times. I'm sure you've noticed whenever you buy or sell Bitcoin, it can take anywhere from 20 minutes to over 1 hour. That's because on average, it can only handle 4 transactions per second. They're trying to implement Segwit 2X so the scaling problem can be solved so that the block size is larger and more transactions can go through. This will make things smoother so there's not a huge jam. In order to implement Segwit, there needs to be at least 95% of Bitcoin miners signaling for it (since they confirm the transactions going through the network). There's currently less than 50%. So what does this mean? It means that a blockchain split is likely to happen because they cannot agree on a scaling solution regarding how to make the transactions quicker.
Future of Bitcoin
If a split happens, that can mean one of two things. Either we'll see a huge crash, or a huge rally. One of the reasons people believe in Bitcoin is because there's only 21 million coins that can ever be made, and they see it as a great investment. But if the blockchain splits, then there will be two Bitcoin and a total of 42 million available. This is something that investors do not want.
So if the chain stays together, I see the price going up because all of this panic will subside. But if the chain does split, there's a huge possibility that we'll see a further crash, and investors jumping from the "old" Bitcoin to the "new" Bitcoin, which could be anywhere from $1 to $20 (similar to the Etherium split with Etherium Classic). If this does happen, it'll be a great buying opportunity for everyone.
With the uncertainty surrounding Bitcoin, I see us in a bear market short-term. Investors are either withdrawing their currency for fiat, panic selling, or buying at the dips. There's already been a few articles from big investing firms talking about where Bitcoin is going in the future. I mentioned the Goldman Sachs article in my recent blog post where they stated Bitcoin could fall to $1,800 in the short-term then rally above $3,000 thereafter. I believe this is the case we're seeing now and would recommend staying out of the market until after August 1st.
Best Coin to Invest/Hedge Your Bets?
If you still want to invest and are looking for the best performer, I would recommend Litecoin. Throughout this downturn, Litecoin has only declined 21% from it's high in the last month ($53 to $42). This is compared to ETH (-35%), DASH (-31%), and XRP (-47%). Litecoin has remained steady and has the lowest percentage lost today (-6.37%), next to Bitcoin (-4.3%). On the chart below, you can see on the days with big volume, the price rose. Whenever the price declined, there was normal volume. This shows that big investors are holding onto their shares and aren't selling anytime soon.
In a market with this much volatility, it pays to be one step ahead. That means setting your stops, and buying when opportunities present themselves. I'm using this opportunity to buy more steempower and take advantage of the cheap price. Other than that, I currently don't have any investments (I'm hedging my bets with fiat until the dust settles). I hold over $3,000 in USD and will wait until Bitcoin gets closer to $1,800, or until August 1st passes, before I start buying. If we do see a crash after August, we can look at late August/September for the rally. With that said, be smart with your investments, and never put in what you can't afford to lose.
Apparently, some darknet market sold many coins.
Wow, I haven't heard of that, I'll have to check it out. I'm sure that's another big reason for the fall. Thanks for the insight!
@cryptopie got you a $0.01 @minnowbooster upgoat, nice! (Image: pixabay.com)
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Thanks for the helpful advice. I haven't had much time the last few days to read about crypto (setting up an alternative energy solutions business and we have a to do list which involves more than crypto!), and your succinct article has given me a good insight into the wild price rise the last few days. Thanks for the BTC HF thinking. Cheers!
Thank you for the thoughtful comment :) I'm glad I was able to sum up everything for you! The last few days have been crazy in the crypto market and people are panic selling. I figured I would give some good insight as to why it's happening. People forget that these are the best times to buy. I'm just waiting a little bit longer to get some cheap coins then reap the rewards in a couple of months. I hope your alternative energy solutions business does great! I know how it is juggling multiple things at the same time, at least you're doing what you can. I'm just happy I could help :)
Oh boy. I seem to have replied to my reply instead of yours. This Wednesday is looking more and more like a Monday as it wears on :-)
Lol I've done that a couple times as well. You're right about combining the real world and blockchain together in order to create more seamless contracts. It's a faster alternative and one that's more efficient. I'm sure we'll see more of this moving forward and have no doubt they're here to stay. Thanks for the great responses!
Back atcha! 😊 😊 😊
Hee hee - I see a typo now...that was supposed to be "ride", not "rise". Serves me right for trying to respond on my phone first thing in the morning. Eish, as we say in South Africa.
Thanks for the supportive words around getting the business set up - really appreciate it. Entrepreneurship/startup could have a completely different flavour if we can incorporate intelligent thinking around crypto/blockchain/IoT solutions and smart contracts. Trying to get both the "real world" and blockchain streams going at the same time so they can "talk" to each other, if that makes sense. So indeed, some insight into why BTC is dropping off a cliff is helpful. And yes, a good time to consider some buying for longer term investment purposes.
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STOPI'm still kinda new to bitcoin and trying to figure out everything. Do you think bitcoin is the best crypto currency?
I think it's a good investment long-term, we'll see it go up. If you're looking for higher returns though, I would buy either Litecoin, Dash, or even Etherium. They all have the best chance for good upside, especially long-term.
so do you think that eventually there will only be one type of cryptocurrency, that will rule supreme, eliminating all other cryptocurrencies?
I doubt it since each cryptocurrency has their own specific role and do different things. Companies are always trying to come out with the next best thing so there will always be competition and diversity. Thanks for commenting!
How does it feel to be a witness in comparison to be a miner in these thrilling days? <3 ;)
I have to say it feels good lol. So much uncertainty right now, I could only imagine.
Great post. I share your views and think this is a great opportunity.
Thanks for reading! Glad you liked it :)
Could be looking like it will be time to get some cheap coins :)
It definitely is!
Thanks for the update. Really informative. I came here via the link you dropped in the PAL discord server btw.
Thanks for reading! I'm glad you were able to find it via the discord server. It's good to know people use those links and that I was able to help out :)
I think Litecoin was a good suggestion on your part. I converted quite a bit to LTC since I appreciate the stability it offers. I mean, it basically was a BTC Clone but now with the development aspect on the horizon and it seems that the userbase is a little more reasonable I can totally see LTC jumping to new all time highs, even while the rest of the market crashes
Thanks for the comment! I've been following LTC for awhile, and with the recent price jump it had, along with the stability like you said, I can't see anything being better. It's already a proven concept and it seems like investors are recognizing that. It's performed great so far, and I have high hopes that we'll see it run in the next few months.
Could always invest in usdt as well as dash. Bitcoin market cap is actually growing right now. I think nows as good a time as any to stick with bitcoin with ripple and eth tanking so hard.
Dash was another coin I was going to mention. That and Litecoin have performed very well when the market was rising. I liked that you mentioned USDT because people don't often think about that, that's what I'm invested in right now. I'm only weary about Bitcoin because I do see more downside, but for the long-term, right now wouldn't be a bad buy. I'm just more cautious. Thanks for the input!
Enjoyed reading your post. I'll start buying last week of July.
Thanks for reading, I'm glad you enjoyed it! That's a great plan :)
Summer sale is on. I too am backing LTC
You hit the nail on the head. Summer is usually the time everything falls. Good to see you're backing LTC as well :)