Price Plunge and Scaling Timeline

Price Plunge

Cryptocurrencies come back to earth this week as we witness a grinding decline across the board from a total market cap of 115 billion to around 61 billion. It’s still clear that BTC is king if you look at the fact that we really have no stand outs when it comes to price decline within the entire cryptocurrency ecosystem. All of the other major cryptocurrencies are in sync with Bitcoin’s price moves right now.  Two things seem to be driving the decline: the ongoing scaling debate which we will talk about later, and the fact that BTC has had near vertical growth recently which always triggers some profit taking in a healthy market. These two factors have created a perfect storm for a sharp drop in price.

Below is a 3 month picture of what is going on with BTC price. Notice the two yellow lines making a sideways triangle or pennant shape, a pattern many traders were watching develop over the last few weeks. Also, notice the blue and purple arrows. The blue arrow was a possible indication of a break to the upside. But as I pointed out in an earlier video that I posted, my thoughts were that this would be short lived as the uncertainty of a coin split was mounting at the time. Notice the purple arrow where we then received confirmation of a break down from a year long bull trend where the price crossed the yellow line to the downside. This is more of what I thought might happen.

We did get a decent bounce right around the $1900 mark which I highlighted with a yellow ellipse in the chart below. This bounce also correlates with news that some miners are already signaling for SegWit 2x 4 days early. This would seem as a vote of confidence for the SegWit 2x proposal and thus maybe a vote of confidence for no coin split. Although hard to prove, what moves price most of the time, this correlation is interesting. This brings us to the second part of this post on the subject of the recent scaling proposals and their effect on cryptocurrency prices as of late.

 

Scaling Timeline

Here is a great resource on what to expect with the scaling debate going forward. As I have said before, if you are confused about trying to follow all of this you are not alone. I try and look for the most simple straight forward pieces of information to help make all of this clear.  Aaron van Wirdum over at Bitcoin Magazine does a great job with a very helpful and straightforward article! I advise anyone looking to get some updated  clarity to read through this article as it outlines all of the important dates going forward with these proposals. There are some important deadlines coming up with the ongoing scaling debate which could have huge ramifications on the price. So if you are looking to buy or sell or trade this major event, this post is a great compass to reference while we navigate through this. To highlight the importance of this I would again reference the chart above where we see a correlation with price reversal and miners signalling early for SegWit 2x. This is one of the events outlined in the article.

If we see all the major milestones with BIP91 passed and reaching consensus, then BIP148 or UASF will activate with no consequence as there will be no non SegWit blocks to reject, as BIP91 will have already activated eliminating any chance of an immediate coin split on Aug 1st. If this is true I would expect price increases with all of these dates as we slowly put confidence back into the BTC market. Whether or not you believe SegWit is good for Bitcoin is another debate, but I believe that activation of SegWit in the short term will be seen as a bullish signal and will be largely reported as such in the media. It will open the door for other things like lightning network off chain transactions. It is for these reasons that I believe if this path continues then we will most likely break all time highs once again. On the other side of the coin, if we do not reach consensus, and there appears to be uncertainty with nodes and miners, then I predict we will drop below $1800 in the near term. Again pay attention to these dates and watch for the developments over the next few weeks. Here is also a good place to keep an eye on which mining pools are supporting which proposals. This is a good indication of what will come out as consensus.

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