BTC Death Spiral - Update
A few weeks ago I wrote a reply to a blog post predicting a BTC death spiral. My article is found here. I went over the points of why the author of the blog post wasn't considering all aspects of the situation. I also provided some charts on how relatively little the impact of the moving hashpower had on BTC and made some predictions. We've now been through a difficulty adjustment on BTC and people are still disagreeing with what I wrote. I want to take a moment and look at the charts since I wrote my post.
A. Hash Rate Chart on August 17th.
from blockchain.info
B. Hash Rate Chart on September 2nd.
from blockchain.info, August 17th in red
C. Difficulty on August 17th.
from blockchain.info
D. Difficulty on September 2nd.
from blockchain.info, August 17th in red
E. BTC/USD Price Chart, 30 days.
from blockchain.info, August 17th in red
F. BCH and BTC Hash Rate Chart, 30 days.
from bitinfocharts.com, August 17th in red
G. BCH and BTC Profitability Chart, 30 days.
from coin.dance, August 17th in red
H. Stats
from coin.dance
I. BTC Median Confirmation Times, 30 days.
from blockchain.info
J. BTC Median Confirmation Times, 1 year.
from blockchain.info
Last 144 BCH Blocks Mined
from coin.dance
Last 1000 BCH Blocks Mined
from coin.dance
Things to Note
When comparing these charts you may note that overall, August was a volatile month for Bitcoin. In spite of the FUD being spread, BTC is more profitable, has hit a new All Time High (ATH), you can also see that Bitcoin's difficulty and hashrate has been recovering and that the volatility in the hashrate averaged out to a rather minor difficulty adjustment. There was a short time period of extended transaction times due to the difficulty that has since been resolved and Bitcoin is currently 24% more profitable to mine. BCH is still heavily centralized, easily manipulated through the Emergency Difficulty Adjustment (EDA), and struggling to hold onto hashpower as BTC soars. BCH has changed difficulty three times in the past week alone, which people attempt to frame as a positive, but with the heavy centralization, it's really just being manipulated. Pull some machines off BCH, let difficulty adjust lower, pop back in as soon as it adjusts to gain easier block rewards, rinse and repeat.
Final Thoughts
I still have not seen anything that has convinced me the people behind BCH had good intentions, particularly when people expressed their concerns with the EDA as a manipulation tool prior to the fork. We will see how it plays out, but for now, BCH is an overpriced altcoin in my opinion. I think over the next few weeks we will see some hash power moving around, a correction in BTC, potentially even enough to allow BCH reach "parity" again. The issue with the representation of parity is still present, with just a few miners taking almost all of the block rewards.
Here is my 0.02 cents worth: If technical trading were that simple, everyone would be rich. Technical trading was invented by Wall Street types as a tool to "extract" even more money from investors. Markets go up, Whales take profits, market goes down, everybody panics and sells, Whales buy back in! It's not really any more complicated than simple supply side economics outside of any really bad market news, and even then it can be emotional.
Must be good to get some fundamentals analysis like this, then...
So really sophisticated traders, HODL with HALF, and daily trade the other half.
They win both ways, but it's a full time job... and it's not even really that interesting, mostly...
I actually have a post on my trading strategies. I divide more than half and half, I divide by my goals for each part. :)
I love free markets. The money follows the better project eventually. If and when I feel BTC is failing I will shift to BCH, simple as that. Resteemed
"The money follows the better project eventually." Not always. Remember Beta vs VHS? Sometimes first to market or other situations dictate the winner. It's like efficient market hypothesis. It's entirely based on the assumption that people trade rationally and make every decision rationally. We know they don't. If they did, Bitcoin Cash would be the new bitcoin.
Bitcoin Cash is the better project and the coin that is the most true form of bitcoin but the network effect will probably keep Bitcoin Core as "Bitcoin".
VHS won because of PORN!!! just like the HD-dvd and Blue-ray ... PORN, not better anything...
Thanks Randy :)
I think the hash power is a good, potentially the best, indicator of which project is THE bitcoin and BCH is still way behind. I don't have quite as much animosity as I did towards BCH, mainly because it's sort of unspectacular compared to it's hype.
THE Hilarski has a point; the "built in hedge" is not a bad thing; and becomes an entity to its own; which is part of the whole and we don't have to look at this as devisive, simply the hedge riding along side the main body.
When/IF the hedge fails ("best project wins") then the overall price adjusts to the main body. And looking at this as a chance to cash out early, ignores the small chance the main body will fail (thus the hedge exists).
I see a lot of math lately that simply combines the 2, into 1.
The reality: BTC has a lot of problems...
People seriously keep forgetting Bitcoin Cash is merely 32 days in existence... If you leave the hatred on the side, the only reasonable conclusion is that BCH is by far the most successful crypto launch in history of crypto... literally consuming 10%+ hash power of the No1 permanently, and this number is poised to rise more and more going forward..
BCH is here to stay, and it will BOOM
I would argue that since the activation of segwit that Bitcoin is actually the alt-coin now - with a whole bunch of bad segwit coding thrown in. Bitcoin Cash is just Bitcoin with a larger block size.
You can argue that all you'd like, but the chain with the hashpower is the real chain. That's how consensus works :)
patience, my dear
No patience (or condescending endearments) needed.
Chart from bitinfocharts.com
You're exactly right @ancap47
Another great post, Ash. It has certainly been fun to watch things 'shift' and 'evolve' since $BCH went live. Upvoted, reposted and tweeted.
Thanks Geoff :) I appreciate your support.
One comment; Bitcoin Cash is by definition not an alt coin... An alt coin is a crypto with its uniquely designed blockchain.... BTC and BCH share the Genesis block, so one can not ''out-bitcoin'' the other for ''realness''...
Its now all up to the market, and one of the two will be Bitcoin based on hash power...
Bcash and ''alt coin'' are derogatory names thought up by those that fear that Bitcoin Cash, and they rightly should... Bitcoin Cash is coming!
Actually they can call it an alt coin. A chain split is still a split. An alt coin is anything not bitcoin and bch is NOT bitcoin. Hashpower is consensus and BTC has the hashpower.
when you say death spiral you mean it's going down?
When I say death spiral, I mean that was the title of the original article predicting the falling hash power causing a difficulty death spiral of BTC.