Markets Await the Fork

The last week of July was dominated by the talks and the possibilities of a new kind of development in the bitcoin market which was called the fork. The bitcoin fork came about due to the need to increase the size of the blockchain which will in turn help to increase its transaction capacity. This was to happen in August and there were a couple of different approaches that were proposed for this to happen. For the end users and traders, it meant that the bitcoin has been split into bitcoin and bitcoin cash and they were likely to be faced with a lot of uncertainty. It was possible that many miners would move to bitcoin cash and hence, there is confusion on what will happen to the bitcoin market and its prices. Many brokers and exchanges stopped transactions in bitcoin till the fork will be completed and this creates a lot of uncertainty.

Technically, 2 approaches were put forth, one by the Bitcoin core team which has done the bulk of the work in the bitcoin opensource development and this approach was called segwit while the other method was proposed and supported by large mining pools and this was called the segwit2x approach. The bitcoin mining industry continues to be split on the approach and the effort for each of these technical approaches and still different teams of miners follow different approaches.

The day marked for the bitcoin fork was August 1 and though the worst was expected, the day passed off peacefully and there has not been any major effect on the bitcoin industry so far. As a matter of fact, bitcoin trades steady since the crucial announcement. The full effect may be known only as time progresses as we have to see which teams adopt segwit and which ones support segwit2x and we also have to see who moves to bitcoin cash and who stays with bitcoin. There is still a bit of uncertainty around but so far, the situation has been managed well.

Forecast

Looking ahead to the rest of the month of August, we expect the $ price to cap the moves in the bitcoin prices in the short and medium term as well. This price region has assumed ominous proportions and it is going to take a mammoth effort for the bulls to break through this region. Also, there have been 2 failures in July near this price region which means that more and more sells and stop losses are being built in this region which makes it all the more difficult to break. So, expect some consolidation and ranging during the month of August which is likely to keep the prices tightly capped. Pay attention to Bitcoin cash (BCC) development and price action as it could determine Bitcoin (BTC) price.

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