Bitcoin’s 10% Plunge Reveals Underlying Concerns About Currency Split
Bitcoin’s volatile ride continued Tuesday, with prices dropping to their lowest in five days as concerns over the activation of SegWit2x weighed on investors.
Bitcoin (BTC/USD) plunged more than 10% on Tuesday, reaching a low near $2470.00, according to Bitstamp. The drop erased most of the progress made last week after developers apparently agreed to avoid a currency split.
Uncertainty Over SegWit2x
Various news sources, including The Wall Street Journal, reported last week that the vast majority of developers signaled support for a new software protocol. This protocol, dubbed BIP91, is intended to resolve differences between the User Activated Fork and SegWit2x.
However, not everyone believes the activation of SegWit2x will go as planned. The main area of contention is the second half of the SegWit2x proposal, which stipulates a 2MB block size that is scheduled for implementation in November.
Bitcoin’s wild ride took many other cryptocurrencies with it. Ethereum, the world’s No. 2 crypto by market capitalization, briefly fell below $200.00 on Tuesday. Ether prices hovered above $200.00 in Wednesday’s Asian session.
At its lowest on Tuesday, litecoin was down 8%.
Although cryptocurrencies are uncorrelated with any other asset class, they tend to follow bitcoin’s lead. This was apparent in mid-June when bitcoin climbed to record territory before correcting sharply lower over the next four weeks. Overall, volatility has played into the hands of crypto-assets, which are enjoying a monumental bull market marked by record-breaking rallies.
BTC/USD Price Levels
Bitcoin has traded within a $138 range over the past 24 hours, with prices reaching as high as $2,608.96. The BTC/USD exchange rate hovered around $2,530.00 ahead of European trade, according to Bitstamp.
Despite the latest drop, bitcoin is little changed for July and has more than doubled year-to-date. The long-term technical picture supports further, as prices continue to grind above the 200-day moving average.