While Bitcoin Cash has gained over 100% in value over the last few days and it's become the most talked about crypto in the past 24 hours, another number caught our attention.
Overall cryptocurrency market cap has lost over U$ 10 billion in the past 24 hours alone. While, at first sight, it may seem that money is flowing into Bitcoin Cash, in reality over U$ 10 billion have gone back to FIAT and out of the cryptocurrency exchanges.
We've been trying to understand this movement and we have a few theories as to what's really happening.
For what it's worth, Korea is the source of 66% of the BTC volume traded in the past 24 hours:
— Chris Burniske (@cburniske) November 10, 2017
Coinbase continue on their battle to keep their customers' records private and out of reach for the IRS (the American tax authority). While we do hope Coinbase wins the case, everyone knows it's a battle between David and Goliath. IRS has a unforgiving track record, especially with businesses where they are not able to collect all due taxes, such as with cryptos.
While not directly tied to the recently rocketing prices in Bitcoin Cash, we believe large investors will be watching this case closely for any signs of further restrictions on cryptos being placed in the world's largest economy.
By some estimates, Bitcoin's encryption algorithm could be broken as soon as in the year 2027. Recent news of quantum CPUs being produced for the consumer market have not helped Bitcoin at all.
So, what happens if the Elliptic Curve vault that protects Bitcoin is broken? Well, we don't want to alarm you, but it would spell the end of BTC. Transactions will no longer be secure, since high power computers would quickly find the solutions to the mathematical challenges which currently keep Bitcoin secure. If these math problems, namely the Bitcoin elliptic curve, get broken, so does all of Bitcoin.
We have been investing into quantum-resistant cryptocurrencies such as Cardano ADA for this very reason. Still this does not explain why money would be flowing into Bitcoin Cash, since it is not quantum-computing resistant either.
While 2027 may be far away, especially in cryptocurrency time, speculators tend to price future events into present prices.
But is this a larger trend, with shops dropping BTC for other faster and lower fee cryptos? The data we have now may be the exception, not the rule.
We at Crypto.BI think Cardano ADA will be the mainstream shopping currency within the next 2 years. But we're biased, as (disclaimer!) we're currently investing a large percentage of our portfolio into this new 3rd generation crypto.
The news that Bitcoin Classic was shutting down isn't too big per se, but something the Classic team said may have ruffled some feathers in Bitcoin investors: according to them, Bitcoin will be dead within the next 6 months.
Yeah, we've heard this before.
Traditional bankers, shills, those short on BTC, everyone saying Bitcoin is dead or dying.
But these folks do have a point. If Bitcoin Cash continues to valuate at this rate, the mining power will flow into it. Bitcoin still is plagued by slow transactions and high fees, something BCH has been really good at dealing with. But will BCH scale? We don't think so.
The same problems in BTC exist in BCH, namely absurd amounts of wasted energy in mining, vulnerability against quantum computers and the lack of a second generation smart contract language. These factors make scaling Bitcoin Cash just as hard as Bitcoin Core.
Well, and then there's good ol' FUD. Investors are scared and nobody understands how BTC went from a few hundred dollars just last year, to nearly U$ 8000 in recent days. This kind of valuation is unseen except in the riskiest traditional real world equities.
Several 20-year-olds have become millionaires in a matter of months, and this may feed the FUD and anxiety which drives prices up and down so quickly in all cryptos.
While we've read all the main discussions about cryptos, we do not think the reasons given explain the movement we're seeing in the past few hours.
Still, a lot of FUD is being spread in the net. Posts like this one, claiming Segwit2X is back alive (like a Chuckie doll), spread anxiety among the inexperienced speculators.
Ethereum has processed 44% more transactions than Bitcoin in the past 24 hours. If this is indeed true, all we know is Ethereum's price has not benefited from the situation. The $ 300 plus and minus 10% range has been Ethereum's home for the recent past.
This post has an interesting theory about it all. But we think the last sentence is the best value you can get from that post:
Advice: Do not believe what you hear from these big business inner circles. Observe, evaluate, critique and decide on your own what the truth is.
Bitcoin volume has gone way up in the past few hours. So the selloff is real, we just don't know where the money is going to yet.
For now, the only thing certain is that U$ 10 billion have flowed out of cryptocurrencies and into something else. Either this cash is sitting in exchanges, waiting to pump cryptos again soon, or a larger unprecedented movement is upon us.