Bitcoin and Bitcoin Cash traders fasten your seat belts.
The Bitcoin market has been experiencing big gyrations lately. Bitcoin has lost 8% of its value in the last seven days, while Bitcoin Cash has gained close to 109%.
What’s driving this change in fortunes between the two digital currencies?
“The biggest driver of the price gyrations is the battle for bitcoin STILL being waged between Bitcoin and Bitcoin Cash,” says Brian Kelly CEO & Founder BKCM LLC. “New money entering space, people buying a “free dividend,” and Bitcoin OG whales dumping Bitcoin for bitcoin cash,” adds Kyle Samani Managing Partner, Multicoin Capital.
Then there’s hype and fear that exaggerates these price gyrations. Hype in the case of Bitcoin cash, as new money doesn’t want to miss out on the big run-up. And fear in the case of Bitcoin, as old money rings the cash register.
The trouble is that, unlike conventional assets, it is hard to calculate the intrinsic value of Bitcoin and Bitcoin Cash. That makes it difficult to determine whether hype and fear have made the two digital currencies overvalued or undervalued and whether it is time to buy or sell either one.
That’s what makes investing in cryptocurrencies a guessing game — which digital currency will gain broad acceptance as a medium of exchange and store of value.
“I think both Bitcoin and Bitcoin Cash are a great bet. Bitcoin is the Monetary Base and Bitcoin Cash is the transactional currency similar to a global M1,” says Kelly. “There is no reason for acrimony, each currency addresses a distinct market and they should be able to be complimentary.”
Samani sees things differently. “In the long run, I believe the medium of exchange and store of value will collapse into a single currency. I am therefore more aligned with the vision of Bitcoin Cash. However, I think it’s unlikely that Bitcoin or any of its forks fulfill that vision. There are many other teams who I believe are far more likely to become global, fiat-free, Crypto cash. Ethereum has the best shot. But it could be others. It’s still very very early.”
And it is very very confusing to the average investor, who may end up staying away from both Bitcoin and Bitcoin Cash.
Meanwhile, turbulence in the Bitcoin market is here to stay. And that makes Bitcoin and Bitcoin Cash investments extremely risky. Investors can lose a great deal of money in a short period of time.