What’s Behind the Bitcoin Price Correction: Truth Vs. the Headlines
Is Bitcoin Really Struggling as Much as People Say?
The last week has shaken Bitcoin’s bullish run! With the recent ETF rejection becoming a distant memory, many are now turning to the biggest obstacle in Bitcoin’s path. Despite fears of a hard fork, rival coins surging, and slow and congested transactions, Bitcoin still seems to be incredibly bullish and popular.
The most probable reason Bitcoin is consolidating from the $1,200 region is due to uncertainty and fear of its future.
No one can truly predict what will happen regarding Bitcoin’s scaling problem, high transaction fees, and internal debate between Core and Unlimited.
To have a better understanding of Bitcoin’s problems, let’s go through some of the main issues.
How Will Bitcoin Scale for its Growing Market, and Will There be a Hard Fork?
Unlimited wants to increase the transaction block size and are willing to hard fork Bitcoin if they get enough hash power, while Core wants to activate Segregated Witness (SegWit) through a soft fork. The soft fork has plateaued at around 26%, fuelling the present dilemma.
The hard fork sounds worse than it is. If the media labelled it as a “software upgrade,” fear wouldn’t have much effect on the price, and the possible altcoin that could be created from this wouldn’t be seen with so much controversy.
Coins such as Litecoin are a product of the “hard fork” process, which shows that it is mostly hype- and fear-based advertising that we hear. Many describe it as splitting the network in half, which is only possible if there is enough hashing power involved.
Slow Transactions and High Fees
Other problems that are directly tied to Bitcoin scaling are the slow transaction times and high miner fees. Bitcoin cannot process enough transactions per second to compete with VISA, and it is considerably slower than other digital coins, such as Dash or Litecoin.
Miner fees are currently high, causing Bitcoin holders with less than one bitcoin being forced to spend large amounts of their funds just on miner fees.
However, while many say buying something simple like coffee is currently not currently possible due to Bitcoin’s slow transaction rate and high fees, others look at Bitcoin more like gold – a system to be used for large transfers of funds, safely and at an impressive speed.
This is something that has been used to create doubt in the market towards Bitcoin, as the media seems focused on highlighting any weakness or flaw Bitcoin has. Is buying coffee really that important?
Weak Hands Jump Ship But Always Jump Back!
With uncertainty looming, investors and speculators alike are resorting to alternative coins, such as Dash and Ethereum, as a hedge against Bitcoin’s potential hard fork, while others are simply holding their value in other coins while waiting for the opportunity to buy Bitcoin at the cheapest possible moment.
People selling their Bitcoin for fiat and cryptocurrencies alike causes Bitcoin’s market dominance to weaken, along with a decrease in price.
As we have seen in the recent months, when Bitcoin bottoms out, few can resist such an opportunity to grow their portfolio. All altcoins are valued against Bitcoin, regardless of their price, and many are simply waiting for Bitcoin’s internal community issues to pass.
Altcoins, however, have made the most of the Bitcoin drama. Dash, for example, has an excellent marketing campaign and constantly compares the InstantSend feature (which allows nearly instant transactions) to Bitcoin’s slow and congested network, with people waiting up to an hour for payments to be completed.
Bitcoin is Still Bullish Overall, With Growing Hashing Power
Despite the setbacks, Bitcoin is still bullish and has maintained a price above $1,000 for the majority of 2017 while hitting new highs each month, including briefly becoming more expensive than one ounce of gold. The volume has caused exchanges like Coinbase to crash under high trade volumes, demonstrating that there is still high demand for the number one digital currency, despite the fears of a hard fork and slower transaction times.
Cryptocurrency is growing in market capital and popularity overall. Hashing power for Bitcoin is on an upward trend, and more people than ever are learning about this technology.
As the chart from Coindesk illustrates, in the last week, Bitcoin dipped back into the $1,000 area, but it shows strong support as it begins to bounce back above the $1,100 mark, something that seems to be quite normal since the start of 2017.
The hashing power is also growing for Bitcoin, highlighting the network’s growing power, which is now in the petahashes. With a healthy price and a healthy amount of miners, it would seem Bitcoin isnt rolling over just yet!