Week in Review: Hard Fork, Hash Wars and Crypto Mayhem

A schism in the bitcoin cash community has unleashed chaos on the cryptocurrency market, threatening to undermine the resolve of long-term holders who may have forgotten what extreme volatility looks like following weeks, if not months, of unprecedented calm. The controversial split, which came into effect late Thursday, has resulted in all-out war between two competing blockchains vying for dominance of the bitcoin cash community.

In the process, bitcoin, altcoins and tokens have experienced one of the biggest selloffs of 2018, dragging the total market capitalization to its lowest in over a year. Although the worst of the selloff appears to have ended for now, uncertainty over the future of bitcoin cash continues to loom large.

Bitcoin Cash Splits

Shortly after 18:00 UTC Thursday, bitcoin cash officially split into two competing blockchains – raising the spectre of all-out war between Roger Ver’s ABC camp and the alternative SV protocol backed by Craig Steven Wright. The controversial split was activated at block number 556,766.

In the hours following the split, Bitcoin.com and Bitmain had already secured a combined hash rate that overwhelmed the mining power of the bitcoin SV side of the fork. In fact, Roger Ver tweeted Thursday that the Bitcoin.com pool “now has more hash rate on it than the entire BCH network had earlier today.”

While bitcoin SV has threatened a 51% attack on the ABC camp, industry statistics suggest this is not currently possible.

That said, the race for control of the bitcoin cash community is not over yet. Just five hours ago, Wright reminded the community via Twitter that the final marathon had not yet begun:

“In our hash competition, we have seen the ABC team bring on their strongest sprinters. We are just at the trials and not yet on the finals to Marathon and they have made a remarkable burst to do a 9.9 second 100m (unfortunately in the wrong direction).”

Crypto Market Plunges

Despite controlling a tiny fraction of the cryptocurrency market cap, bitcoin cash has had an oversized influence on how assets behaved this week. The value of all coins in plummeted by as much as $37 billion over two days, with all major assets in the top-20 recording double-digit percentage losses.

The crypto market bottomed around $175 billion, the lowest in over a year. Bitcoin’s price briefly traded below $5,200, its lowest since October 2017, following its biggest selloff since March. By Friday, bitcoin and the major altcoins had rebounded from their recent lows, though bitcoin cash was still nursing losses.

XRP and XLM are leading in the recovery on Friday; the former is trading more than 4% higher at the time of writing while the latter added nearly 8%. Outside the top-10, basic attention token jumped 15% and 0x added nearly 10%. Both assets were recently added to Coinbase, which allows traders to purchase them directly via fiat currency.

Trade Hopes Fade

U.S. stocks came under renewed pressure Friday after President Trump’s Commerce Secretary Wilbur Ross said a new China trade deal by January was virtually impossible.

In a Thursday interview, Ross tempered expectations that upcoming negotiations between President Trump and Chinese counterpart Xi Jinping would yield a new trade agreement. At best, the trade negotiation would result in a common “framework” that would guide both sides in resolving tensions. The face-to-face meeting will be held at the sidelines of the G20 Summit in Buenos Aires, Argentina Nov. 30-Dec. 1.

The S&P 500 Index finally managed to snap a five-day losing skid on Thursday, but markets were once again subdued at the end of the week. Plunging oil prices, risks to global economic health and a rollover in technology shares have placed downward pressure on markets this week.

The Week Ahead

The so-called hash war engulfing the bitcoin cash community is set to rage on next week, as the competing chains battle for market dominance. At the time of writing, bitcoin ABC remains in the lead with the SV camp failing to deliver on Wright’s egregious threats. However, things can change fairly quickly given Wright’s supposed control of large swathes of the network’s hash rate. Recent commentary by Roger Ver suggests that Bitcoin.com now has more hash rate than the entire BCH community had just hours before the hard fork was implemented.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

Chief Editor to Hacked.com and Contributor to CCN.com, Sam Bourgi has spent the past nine years focused on economics, markets and cryptocurrencies. His work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Avid crypto watchers and those with a libertarian persuasion can follow him on twitter at @hsbourgi