This past week bitcoin prices dropped below the sub-$4,000 range to a low of $3,600 on August 21. Bitcoin market’s started to bounce back the day after and the price is hovering around the $4,230 territory at the time of writing.
Bitcoin Price Bounces Back Just Before Segwit Activation
Last week bitcoin bears managed to drag bitcoin’s fiat value down to the $3,600 range as many sellers took in some solid profits. After breaking below the $4,000 support region, the decentralized currency quickly jumped back to just about the $4K territory, and held that position for about 12-18 hours. Following this period, during the early hours of August 23 bulls pushed the price back up to $4,250, coincidently at the same time bitcoiners watched Segregated Witness (Segwit) activate on the Bitcoin network. However, the price is currently bouncing between $4,190-4,230, dipping slightly after yesterday’s high.
Spectators have also been watching the correlation between bitcoin (BTC) and bitcoin cash (BCH) markets as the two have been sharing an interesting relationship. BCH reached an all time high of close to $1000 last week, and became more 140 percent more profitable to mine than the BTC chain. Further, this week a large swathe of miners started pointing their hashrate at the BCH chain and it is now longer than the legacy chain. When BCH’s market value increased, at the same time the price of BTC dipped, but the price per bitcoin has since rebounded just before Segwit activation. At press time the price of bitcoin cash is roughly $650 per BCH and the chain is currently 14 percent more profitable to mine than BTC.
After the correction on August 21, bitcoin trade volumes increased immensely as the currency is trading over $2.4B in 24-hour volume over the past three days. Technical indicators had shown the short term 100 Simple Moving Average (SMA) dropped below the long term 200 SMA confirming it was a seller’s market. The 100 SMA is still under the 200 average, but both trendlines show they may soon cross hairs in the next 12-hours. The Relative Strength Index (RSI) oscillator is heading north at the moment, indicating a positive momentum upwards. Reading the Stochastic’s momentum indicator, however, details there are strong resistance levels ahead for bitcoin, and order books on many popular exchanges confirm this signal.
Community Sentiment & Recent Bitcoin Events
Yesterday lots of bitcoiners patiently waited for the Segregated Witness protocol to activate on the network. Bitcoiners threw parties and celebrated the protocol’s activation on August 23. Segwit activated at approximately 10 pm EDT on August 23 on block 481822 mined by the pool BTC.com. As the protocol goes live on the Bitcoin blockchain, users will watch to see what happens with the new changes. Many will be waiting to see if it relieves transaction (tx) congestion and network fees, which have reached an all-time high of above $6 per tx.
Additionally, the community has also been debating the next part of the Segwit2x roadmap, which plans to hard fork the network and raise the block size by 2MB. This part of the compromise has caused quite a bit of quarreling this week, but the Segwit2x working group is continuing their plans. On August 23 Segwit2x lead developer Jeff Garzik states:
As of this writing, we continue to have over 90% agreement from miners to move forward with SegWit2x. SegWit2x is officially locked in and the plan is working. We activated BIP91 without issue, as expected — Hashpower continues to signal 90+% support for SegWit2x.
The price remains bullish, for now, after Segwit’s activation and people remain somewhat optimistic about the future of bitcoin. People will continue to watch the BTC/BCH relationship as hashpower resources seem to be bouncing back and forth between both chains chasing profitability. With Segwit2x there will be a lot going on over the next few weeks which can undoubtedly affect the price of bitcoin going forward.
Bear Scenario: For the time being there is a solid floor within the $4,000 range if the tides turn back downwards. However, bears could pull the price down further alongside negative events in the bitcoin ecosystem causing some sell-off. If so prices in the $3600-3800 territory could take place again for various reasons. The Stochastic indicator is showing the price may be in the overbought range at press time but things may change during Segwit activation.
Bull Scenario: Bulls and buyers seem to be back in the game trying to move positions higher. The activation of Segwit could be causing this market exuberance and it could possibly push the price higher to a new all time high (ATH). Another ATH is possible but there are significant resistance points along the way, and bulls will have to use brute force to break these zones. Prices moving towards the $5K range can still happen at this moment in time.
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