Bitcoin Will Fork Again Soon
In today’s article, I will be covering why Bitcoin will soon fork again and how we should invest accordingly.
I know it only seems like yesterday that Bitcoin forked in the first place and we all hated how the uncertainty surrounding it caused the market to crash. Sadly, though it’s going to be happening again soon.
Please don’t bury your head in the sand and pretend that it isn’t happening just because you don’t want it to. Instead, I recommend to plan accordingly and make some money in the process. The alternative is to ignore the situation and potentially lose lots of your investment.
First though, I will explain why Bitcoin is forking again so soon.
A Little Recap
Most of you are probably roughly aware of the trials and tribulations of Bitcoin as of late but, in case you aren’t, here’s a little recap:
- Bitcoin is attempting to be the digital currency of the world
- The problem is Bitcoin isn’t fast or cheap enough currently to serve the whole world
- Therefore, Bitcoin attempted to rectify this problem through potential ‘scaling’ solutions
- A few of these scaling solutions were put forwards as options
- The miners voted that Segwit2x was the best of the solutions
- However, the uncertainty surrounding this scaling solution caused the market to crash, losing nearly 50% of its peak value
- Bitcoin Cash formed as a hard fork due to part of the community believing that Segwit2x was simply not enough of a solution
- Segwit (NOT SEGWIT2X) was implemented on the network and the price of Bitcoin rebounded to new heights
Why Is Bitcoin Forking Again?
It seemed like everything improved for Bitcoin after the vote for Segwit2x was agreed upon by the miners. Therefore, you might be confused why the issue of forking is still around.
The reason for this is that the scaling solution ‘Segwit2x’ comprises of 2 parts;
A. Segwit – This part has been implemented already
B. 2x – This switch from 1MB blocks to 2MB blocks will take place around November time
In other words, we are currently only halfway through implementing Segwit2x and, the 2x part, which is arguably more controversial that the first part, is still to come.
The final part of Segwit2x is scheduled to be implemented around Mid-November.
After this switch, all future blocks in the Bitcoin blockchain will have to be 2MB, compared with the previous 1MB sizes.
The main problem with this is that Bitcoin miners will have to make changes to their equipment in order to make this possible.
We’ve already seen the massive issue caused by implementing Segwit, which is far easier than increasing the block size.
In fact, the problem was so severe that the mining pool of ViaBTC decided to support the hard fork named Bitcoin Cash instead of remaining with Bitcoin.
With such a big problem caused by the least controversial part of the scaling solution, it would be naive to think that we won’t see a similar effect caused by the 2nd part.
What Should We Do?
Whenever there is uncertainty in the market, prices fall. We saw it before and I believe we will see it again.
When will price falls begin?
Nobody can say with certainty when the next price fall will begin. However, we can look to the last time as an indication.
As you can see from the image above, the peak reached by the market occurred around Mid-June; 6 weeks before the deadline for Segwit2x.
Last time, prices began falling 6 weeks before.
I don’t believe that this will remain the same though. After all, investors should be wiser this time around, having learnt from their mistakes.
As a result, I expect investors will be withdrawing their money earlier this time around. My guess would be that the peak will occur around 8-9 weeks before the deadline this time.
On top of this though, I always like to give myself a bit of a safety net and therefore I will be making changes to my own portfolio a week before this time.
How Will I Change My Portfolio?
In the past, we have seen that the price of Bitcoin appears to determine the price for the majority of cryptocurrencies.
For this reason, as I’m expecting the price of Bitcoin to fall, I expect these currencies to crash also. In fact, I would expect that most currencies will crash far more than Bitcoin as they are more volatile.
Therefore, it is imperative to avoid investments into these at all costs.
Which Strategies Will Work?
The truth is there are several possible strategies in this scenario:
- Switch all of your holdings to USD Tether so that your holdings remains virtually the same
- Invest in Cryptocurrencies whose prices tend to go in the opposite direction to Bitcoin
- Invest in ICOs that aren’t currently in the market and therefore won’t crash with the market
- Remove some investment from the markets
I will mostly be adopting strategies 2 and 3 (also a little bit of strategy 4) because I believe that there is the potential to actually earn a lot of money in this time; arguably a greater potential than normal market conditions because volatility is higher at this time.
Strategy 2 is only a viable because I believe that the market will react differently to this potential hard fork than it did last time.
The reason I think this is because investors have seen that the cryptocurrency market rebounded so strongly last time and they will be expecting the same again.
As a result of this increased confidence in the market this time around, many investors will simply choose to find alternative investments in the market for the meantime, rather than withdrawing their money completely.
It is for this reason also that I do not expect the market to fall as severely as last time.
Which Currencies Prices Are Inverse To Bitcoin?
Some people will tell you that Ethereum is and, in theory, it should be.
Being the largest Cryptocurrency is a huge title and provides in itself significant value. We have seen this with Bitcoin being the number 1 and constantly growing, mostly just because it’s already the number; the technology behind it is sub-standard in comparison with virtually all other cyrptocurrencies after all.
Therefore, you would expect that, if Bitcoin falls in value, Ethereum should increase in value as it comes closer to being the number 1 cryptocurrency.
This is exactly what I was expecting last time and yet this didn’t happen. Instead, the price of Ethereum fell quit severely along with the majority of other currencies also.
I can only speculate, but I believe the reason for this is that the overall market is so new that people are currently viewing the market as a whole, rather than consisting of many unique currencies.
As the market develops and people become more aware of the many unique use of the blockchain (the technology behind cryptos), I expect that the price of Ethereum may in fact be inversely related to the price of Bitcoin i.e. when Bitcoin goes down, Ether goes up etc.
It’s possible that this could even happen this time around but it’s not worth the risk.
In fact, there is only one currency that I am 100% certain is inversely related to the price of Bitcoin and that is…
For this reason, I will be moving a large chunk of my holdings to Bitcoin Cash.
It is a massively risky strategy to invest in just one currency and, therefore, I recommend that no one moves all of their holdings to just Bitcoin Cash.
Personally, the only major currency I will be holding is Bitcoin Cash; the rest of my money will be spread between some of the smaller cryptocurrencies that are less affected by the entire market, ICOs and some money will be withdrawn. My holdings will look like this:
1. Bitcoin Cash (The only major Crypto)
2. Smaller Cryptos that are less affected by the market
3. Upcoming ICOs with incredible potential
4. I will withdraw some money and re-invest in Football Index; a more stable market currently
If you’re wondering which smaller cryptos and ICOs I will be investing in and those I am already invested in, I do not have a definitive list for you right now because I’m still in the process of putting together my perfect portfolio.
I do, however, write regular articles about smaller currencies and ICOs though so you can easily see by following my articles 😉
I can tell you at this point that I’m very keen on the upcoming Monetha and Aventus ICOs though still.
Disclaimer: All of this is just my opinion. I have carried out significant research to arrive at this conclusion but nobody can say with any certainty what will happen.
I am also not a financial advisor and I never recommend financial decisions for anyone. I am simply 100% with my followers about what I believe and you guys can choose to copy me if you wish 🙂
I hope you guys have enjoyed the article and learnt a thing or two. I post high quality (IMHO) articles about Cryptocurrencies – which currencies to buy, which market trends can we profit from etc. – plus the other ways I make money online.
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