Bitcoin has again breached the $6,000 mark to briefly reach a new all-time high of $6,350 and may well push higher still before the next fork (SegWit2x) in the protocol, expected to take place on 16 November.
This is the most important fork to-date because it brings to a head the fight between the core developers who maintain the code and the miners and service providers that either maintain the network, or interface with the network’s customers who invest or buy and sell with bitcoin.
Even bigger gains were seen over the weekend in Bitcoin Cash (BCH), the coin that came out of the hard fork back in August in opposition to the SegWit upgrade that altered the bitcoin protocol’s code to allow more transactions to be handled in a block.
Those in the community unhappy with the SegWit implementation, which they saw as a half-measure, decided to back BCH instead with its block size of 8MB as opposed to the 1MB on the legacy chain. SegWit effectively made the 1MB block bigger by moving out data that didn’t have to be in the block, but this tweak was not enough to satisfy those wanting substantially larger blocks.
Immediately upon launch BCH spiked to $900, but then plummeted to as low as $300 when many bitcoin holders, who were all given a proportionate number of BCH, sold the new coins.
But something interesting, and profitable, has just happened, to the benefit of those who didn’t unload their BCH – the price jumped around 35% at one stage over the weekend, decisively breaking out from the top of its recent trading range of $300-350 to climb to $518. How is this to be explained?
A big clue lies in the exchanges where BCH is most heavily traded. The first, second and fourth-placed exchanges by BCH volume are all based in South Korea – Bithumb, Coinone and Korbit, respectively. At the time of writing (with South Korea is asleep) the price is down 10% from the weekend high and 1% today against the dollar and 4% against bitcoin. The Bithumb exchange alone accounts for 50% of trading volume in BCH worldwide.
It could be that South Korean crypto investors are taking the view that BCH may be a relatively safe place to park some funds until the SegWit2x hard fork uncertainty clears.
Other news out of South Korea that may have helped sentiment includes the start of an open beta by Upbit, a new crypto exchange. UpBit is the property of Korean fintech company Dunamu, which also owns the popular trading app Kakao Stock. UpBit has teamed up with US crypto exchange Bittrex, one of the largest exchanges for trading altcoins, currently listing markets in 265 coins and tokens. The move by Dunamu has likely not gone unnoticed by mainstream investors and may have helped to improve the image of crypto among share traders.
Meanwhile, in another sign of the growing strength of the crypto market in the country, number-two exchange Coinone announced today that it has integrated Litecoin, the fifth-largest coin by market cap, into its Korean Won markets.
On a somewhat sour note for bitcoin, South Korea’s central bank governor, Lee Joo-yeol, announced last week future plans to regulate it as a commodity rather than a currency. It is unclear exactly what the implications of the announcement might be for the market at this point, but the central bank clearly doesn’t envisage the virtual currency competing with fiat currency any time soon.
Elsewhere, the United Arab Emirates central bank governor, Mubarak Rashid al-Mansouri, issued a warning against using digital currencies as a means of exchange, although he hasn’t gone as far as banning the entire asset class, which the State Bank of Vietnam has done from 1 January 2018. Anyone breaking the new law will be subject to a fine of 150 million dong (£5,000).
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