Bitcoin is about to get hit with a short squeeze on the exchanges. The result will be a price rise, followed a few days later by a retreat.
Forget about SegWit versus SegWit2X versus UASF. Right now you need to be prepared for the User Activated Hard Fork by Bitcoin Cash on August first. Yes, this will probably affect you even if you don't care about Bitcoin Cash.
For the purpose of this article, we do not care what the reasons are for the fork or the politics involved. We only care about that fact that "Hard Fork is Coming" on August 1st, and how we can benefit from it, or at minimum what we need to do to protect our assets.
The reason this hard fork is significant is that those who hold Bitcoin in their own wallets will be able to hold their coins on both chains after the fork. This is similar to what happened when Ethereum split into $ETH and $ETC last year.
What Hard Fork?
A group of exchanges, miners and wallets has announced a big-block hard fork of Bitcoin on August 1st, which will create a new form of Bitcoin called "Bitcoin Cash" or "$BCC". It is also being called "Bitcoin ABC" by some because it uses the Bitcoin ABC client. Several miners, wallets and exchanges have announced support, including:
- OKEX
- Livecoin
- ViaBTC China - Americans forbidden
- Bitcoin Unlimited and nChain
- okcoin
- Korbit
- Bithumb
- Huobi
- Bitfinex
Essentially, all Bitcoin holders will get free $BCC of an amount equal to their $BTC balance at the moment of the hard fork. This is being called "the air drop" in the forums.
For the full, updated list of which exchanges do or do not support the BCC split, go here:
https://steemit.com/bitcoin/@belerophon/list-of-exchanges-who-do-or-do-not-support-bitcoin-cash-the-split
Just as Ethereum Classic has continued to exist with its own community and maintain some level of value, it is entirely possible that $BCC will behave in a similar manner, making it worthwhile to get them. Then you can either hold them or cash them in, for say $BTC.
Why This Affects Everybody
The problem for the exchanges is that ABC's hard fork announcement was only made two weeks before the hard fork date. This is not enough time for most exchanges to put in place measures to support the new coin. Several exchanges have announced that they will not support the new coin. (see full list at the end)
If your exchange does not support $BCC, it means they may (and probably will) take the "air drop" free coins for themselves.
Bitcoin Cash is likely to trade far below the price of Bitcoin, especially if lots of Bitcoin holders collect the "air drop" and dump their coins on the markets that support it. But, if you have a substantial Bitcoin balance, getting a free 5 or 10 percent worth of $BCC coins is not something most people would pass up. Rational actors don't usually leave money lying on the table.
My prediction is that a substantial percentage of the traders using Bitcoin exchanges are going to liquidate some or all of their holdings in alt coins, convert to Bitcoin, and withdraw their $BTC from the exchange in the run-up to August 1st.
Bitcoin.com agrees:
Again, regardless of Segwit2x’s progress this fork most likely will happen and bitcoiners should be prepared. There are a few days left until August 1 and those looking to acquire Bitcoin Cash should remove their coins from third parties into a wallet they control. -- source
Coinbase has stated:
“Customers that desire access to UAHF [AKA Bitcoin Cash] coins should withdraw their bitcoin from GDAX by July 31.”
If many suddenly start pulling their Bitcoins out to participate, this will probably cause a $BTC short squeeze on the exchanges. This will put major upward pressure on the price of Bitcoin, possibly setting a new record high.
However, a few days after the hard fork, once they have collected their $BCC, the very same traders will probably put their $BTC back into the exchanges, and get back into their alt coin positions at much lower prices than when they left. A flood of incoming Bitcoin will be sold for altcoins and fiat on the markets. Depending on how much of the market does this, it could very well cause the Bitcoin price to retreat significantly.
The Real Danger
The hard fork seems very likely to cause a "Bitcoin Run" on the exchanges that will "stress test" them all.
Don't panic, Bitcoin is anti-fragile. Any exchange that is full reserved should not be threatened.
But the problem is that we never know which exchanges are fractional reserve until AFTER they collapse.
Any exchanges who have been running on fractional reserve have a high likelihood of failing this coming week. The exchange BTC-e is already down, though for a different reason, the operator was arrested.
Therefore, a second reason to get your $BTC out of the exchanges now is to avoid a possible run later this week. (Yes, I realize that saying this can cause a run by itself, but I am merely pointing out the obvious.)
If any exchanges fail this year, they're probably going to fail between now and August 1st. As the day approaches, the withdrawal orders could also overwhelm the exchange's ability to fulfill orders, leading to delays.
Between those wanting to collect free $BCC and those wanting to get their money out of the exchanges before the "stress test" it seems very likely that there will be a short squeeze on Bitcoin in the next five days.
The question is do you want to get your Bitcoin out now, or wait until the last minute? Or do you want to keep your Bitcoin on exchange while keeping your fingers crossed?
How to Benefit
There are three ways to speculate on the Bitcoin Cash hard fork:
Hold your Bitcoin in your own wallet and collect the free $BCC after the chain splits; or,
Hold your Bitcoin in an exchange (that you trust to be solvent) and sell for fiat (or gold) into the short squeeze which will probably peak on the last day of July, then buy back in after the price retreats; or,
Open an account at ViaBTC.com now (sorry, no Americans allowed), put your Bitcoins into "frozen" status, receiving both the $BTC and $BCC in advance, and trade them on the ViaBTC exchange. This would allow you to trade one side of the fork for the other. So if your bet is on $BTC you can exchange your $BCC for $BTC. You cannot withdraw either coin until after the fork, but if you think $BCC will crash, this allows you to sell yours early. At the time of writing the price of $BCC on ViaBTC was equivalent to $458.
List of Wallets That (will) Support $BCC
- Trezor by far the simplest, safest and easiest option
- Electrum Cash coming soon (we hope)
- Ledger
- BitcoinABC This appears to be a full node! Requires 32+ Gb
List of Wallets that you can modifiy to support both $BTC and $BCC
List of Exchanges Announcing They WON'T Support the $BCC Split
[This list is undoubtedly incomplete, so ask your own exchange.]
How to Be Safe
As always, the safest way to hold Bitcoin is in a cold wallet for which the keys are not stored on a computer. Second best is a trezor or other hardware wallet that holds the keys for you. Exchanges are the most risky places to hold your Bitcoin. This is not a new problem.
"The Chinese mining pool, ABC, has announced a big-block hard fork of Bitcoin on August 1st"
This is not accurate. There is no ABC Mining pool. Bitcoin ABC is the client that was created by a very large group of early bitcoiners fed up with the stalling tactics of govt-sponsored Core developers to raise the block size limit.
Because it has been in the works for so long, there are many miners and users ready to switch to a big block chain.
Thanks, I will fix this immediately.
I thought there is no hard fork?
https://medium.com/%40lukedashjr/why-nothing-will-happen-with-bitcoin-on-august-1st-93f49a1a930d
So it´s more like a new Altcoin, and the name can´t be BCC because it´s already taken..
Oh its a hark fork for their a chain split, a new altcoin won't contain any history of bitcoin. Bitcoin cash is a hard fok of bitcoin trying to become bitcoin its weird!
It is the result of a power struggle for control of the vision of bitcoin turning into a divorce.
Very good stuff. Following you now.
I'm personally putting mine into ANT, EOS, and IOTA.
Great reporting on the possible scenarios. All this drama will make a great movie someday.
drama will make them money
This fork made me buy a trezor and after I did I feel so good knowing that my BTC is now actually safe.
I was thinking the same thing would happen in the market. I have sold out of ETH for BTC in preparation for the fork
Bitcoin cash will just be another alt coin. one of the 80% that will fail at the end of the day.
If Bitcoin is going to the moon, then then we can earn a lot of money on it,
If Bitcoin is going to the moon you better bring your space suit!
If Bitcoin is going to the moon, it will be the first cryptocurrency on the moon.
One small boost for bitcoin, one giant leap for the blockchain."
Wow, great information... I had also a news comes out.. please read if you have leisure time... I resteemed your informative blog and followed you
https://steemit.com/bitcoin/@hiroyamagishi/bitmex-won-t-support-bitcoin-cash-due-to-security-concerns-july-26-2017
Will we be mining on the moon then? I hear the hashing rates there are "Out of this world" :)
Electricity bill will go down, you can use a lot of solar power over there 😂😂😂
Well BCC Futures Has Already Crashed So...
Very interesting and informative. Thank you. So it sounds like most of the entities supporting the fork are Chinese? That makes it even funnier that their declaration was using all this "We The People" patriotic language.
What do you think of the Jaxx wallet? Will that keep my stuff safe?
https://99bitcoins.com/jaxx-wallet-review-bitcoin/
Thanks!
Hey, what is a hot wallet vs a cold wallet?
A "hot wallet" is an account controlled by a computer program that holds the keys. It can make transactions in real time, but if a hacker gains access to the computer on which the program is running, he can steal the keys, and therefore the balance.
A "cold wallet" is an account for which the private key is stored offline, either on paper, in the brain of a person, or on a device like a Trezor. Since the private key is not online, it is theoretically impossible to hack a cold wallet.
Thank you!
Great post very informative.
Thank you for the highly informative post! This is good news for Bitcoin investors and no time to panic. Still highly suggest you take your Bitcoin to a paper wallet everyone!
Well put together post man congrats. Followed
This is a really informative post. Thanks.
I have a more realistic scenario.
Before August 1st - buy Altcoins like ETH and ETC using your BTC. They have decreased their values almost twice against BTC since recent peaks . Hold them for a week or two, Wait till they regain the previous level and then sell on the peak. As result you will get 2x
Bitcoin Cash will be depreciated almost to zero at August 1st. Wait till that moment and they buy cheap. Then wait undefined amount of time to see how is growing. Then sell anytime you think it is appropriate. As result you may get something between 10x and 100x
Don't think you will be able to benefit from free BCH at August 1st. The sell off is going to be huge. You won't have a chance to realize your gain because other people will sell at huge volumes. They all hope for free money. In fact, Bitcoin Cash team is not going to buy back until it reach almost zero. Then they will come and "save" Bitcoin Cash by taking it almost free
I don't thing BCC will go to zero because the player in china may soar the coin they controlled.
exactly. But it will happen later. Chinese players want absolute control of their Coin, therefore they may need as much as they can. Obviosly they would have more coins, should they start buying at low price, rather than opening price. Therefore they let their currency sink first and then buy it ALL almost for nothing.
If I have my bitcoin in exodus wallet; I can export private keys and import into trezor?!
Great piece. Many possible outcomes. Chess like.
Whoever ends up holding the original btc after all the dust settles will be the victor.
Americans never get to do any of the fun stuff no fair! https://steemit.com/bitcoin/@hotsauceislethal/bitcoin-price-forecast-7-26-2017
Off like a rocket, feds can't stop it. lol
The Bitcoin Cash move is feeding off the FUD created around August 1. Very frustrating and harmful to the Bitcoin community.
https://steemit.com/bitcoin/@juanplemus/the-bitcoin-cash-powergrab-play
That depends on how you define the Bitcoin community. Being informed is helpful, not harmful.
I like your writing, very informative!
But i don't think that BTC will rise massivly on the short term - more the opposite. I think after Aug 1st prices will drop significantly and will recover until September / mid September. But thats just my opinion ;-)
We shall see. :)
Well you were spot on as far as a short term squeeze.
Actually, no one knows! therefore, yes we will see :D
But we both agree prices will fall some after August 1st.
Well i am going to hold them in a cold wallet. I hope Multibit will work!
Doesn't affect me, I use Litecoin and I will hodl forever.
Well, I have my money moved to Waves some time ago, and only have few of my Bitcoin left. I was gonna return them to Bitcoins but I decided to keep them in WAVES since heard about this forking. I better be on the safe side (even though waves itself isn't safer as its price is decreasing a lot lately, I still believe in waves).
That's the only thing I might regret by not keeping BTC in my electrum wallet at the time of forking.
This is very terrifying part!!
Thank you for the clear information and especially on which exchanges and wallets will not support the new coin.
Upvoted and resteemed.
Thanks for explaining what's going down. I think I'm going to sit this one out because I feel the prices will drop too quickly to react to it.
You were right. I did not listen to you. And lost money. I should have sold altcoins and buy bitcoin. Now i think it is too late :( Any suggestions?
Thanks for the info will be opening a via account now free bitcoin yay!
Someone have any information about Xapo and Nicehash? thanks !!
this is a great post with a lot of useful information I can appreciate your effort in making the post keep up the great posting I will be up voting this post as well as following
This detailed yet explained in a simple manner post should have certainly received more votes as it concerns almost all of us. At least crypto newbies like me found it very useful! 😊
Thanks for the post! Anybody knows does blockchain.info/wallet will support chain split?
Great insights into the possible coming surge/regression of BTC due to the split. It is definitely good advice to move your bitcoin out of the exchanges as well. This could play out in so many ways.
Also, Kraken has announced they support both BTC and BCC
hello sir i am also new steemit followed you so can also follow me plz thanx
Great ! It will be reach to high !!
im a newbie. Need followers guys🙏🏼 i do follow back😂
amazing post my brother,i reestem
[WARNING] Everybody should stop using Bitcoin (Right Now)
Ethereum price may goes up this week [Starting from tomorrow]
It is going to be an exciting couple of days!
Excellent post, follow me @ joserc.vzla
Good points from a market perspective. The price increase you predicted happened, but so far, other than BTC-E for unrelated reasons, it looks like smooth sailing.
Wish I got into Bitcoin much sooner.
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