As the Bitcoin Cash (BCH) fork unfolds, crypto markets sell off nearly $30 billion seeing investors put their money on the sidelines until the drama surrounding the BCH hash war is settled.
Most of the major cryptocurrencies had been trading sideways up until around 8:00 a.m. Eastern Time on November 14, 2018, when the crypto markets sell-off began. According to CoinMarketCap.com the total value lost between November 14, 8:00 a.m. ET to November 15, 10:00 am ET was nearly $30 billion at which point a rally began. Trading volume during the sell-off has been higher than that in that in recent weeks but not abnormally so compared to trading volumes seen for most of the year.
Crypto Markets Sell Off
As can be seen in the following chart, the sell-off has impacted Bitcoin Cash the most, with it having lost nearly 30% of its value compared to where it started the day on Nov. 14. Of the other top 5 coins by market capitalization, they have lost 10-15% of their value with Ethereum being the hardest hit among that cohort.
Top 5 Coins Past 36 Hours
As the drama surrounding the Bitcoin Cash fork has unfolded, the network upgrade was completed just prior to 1 p.m. Eastern time on Nov. 15. What happens from this point will be one of the most watched series of events in the crypto community in some time.
Anticipation around the BCH fork has Been High
The reason for all this excitement and anticipation is that it will test how robust the consensus mechanisms used in Bitcoin Cash, which is similar to that used in Bitcoin (BTC), is to various forms of attacks. One side of the ‘hash war’ has already declared that it’s going to attempt to wipe the other out, whether they can or not will be the first time something like that has been attempted at scale.
Many in the crypto community see this as a ‘big event’ and are closely following the events.
I'm not super into sports, so, for instance, I don't remember when was the last time I watched the Super Bowl. But looking at this, I thought, *this* is my version of the Super Bowl. ? pic.twitter.com/lEIQTf6Kj9
— Laura Shin (@laurashin) November 15, 2018
Where do Crypto Markets Go From Here?
From the outside, it appears as though much of the crypto markets sell-off has been driven by the uncertainty around the Bitcoin Cash fork. If that was the only catalyst then one could expect a relatively short-term recovery in most of the other cryptocurrencies as the winners and losers in the BCH war are determined over the next hours and days.
However, the sell-off could also be indicative of a broader recognition of investors that any of crypto assets face the risk of a fork. The recognition of investors of the risks facing crypto assets should be seen as a positive for the asset class. As different coins are more prone to this risk given the relative strengths of their developer and user communities this sell-off could be seen as a sign that crypto markets are beginning to mature. In the end, this will help to shake out the crypto assets that don’t have the strength to succeed in the long run.