Bitcoin Cash is up 30%, and BSV increased 76% in the past 30 days – but a CoinMetrics manager predicts they could collapse within months.
You can thanks Craig Wright for the Bitcoin forks pump on the weekend, after reports emerged that the Australian may possibly have they keys to the Satoshi wallets. (Spoiler: The judge thinks it’s total BS)
Wright produced 428 documents, including a mysterious one called Tulip Trust III, which were filed in court.
The speculation fueled spike occurred soon after, with Bitcoin Cash pumping 17% and Bitcoin SV surging an astonishing 50% on January 11.
Apart from a potential dump of Bitcoin Core for tax reasons tanking the BTC price, the forks would logically be the big beneficiaries if Wright’s story came true.
However Bitcoin SV’s billionaire benefactor Calvin Ayre tweeted the pump was “likely just one rich group seeing the light and understanding the value and coming in to take a US $50 million position”.
“It’s not caused by Craig winning all his appeals recently”
New Judge just as leery of Wright as old Judge
District Judge Bloom agrees with former Judge Reinhart that Wright has little credibility and has given him until February 3 to indicate if “this mysterious figure has appeared from the shadows”.
The judge clearly thinks its a fabrication however, writing: “the Court questions whether it is remotely plausible”.
Prediction: Bitcoin forks could die due to the halvings
Neither Bitcoin fork makes much money out of their low transaction fees – on January 9 for example they made a combined total of $300 for the day.
In early April, the block rewards for the forks will be cut in half, which will make mining them increasingly uneconomic (unless the price doubles).
“After their halvings, new issuance will be cut from a combined $600K to $300K,” pointed out Crypto Twitter’s Ceteris Paribus
CoinMetrics CMBI Manager Benjamin Celermajer tweeted this week that the halvings could spell doom for the forks.
“The upcoming halving events of Bitcoin Cash and Bitcoin SV could very well lead to thier ultimate demise” he said, pointing out that miners were likely to switch to BTC mining in April after the block reward halvings for SV and BCH.
The Bitcoin block reward halving will occur a month later in May.
A reduction in hash rate would make the networks vulnerable to attack and Celermajer said that if marginal cost miners unload their bags to make up for lost revenue this could send prices spiraling downwards.
“This could lead to massive market fear and capitulation for Bitcoin Cash and Bitcoin SV, potentially leading to their short term and longer term demise.”
0/ The upcoming having events of Bitcoin Cash and Bitcoin SV could very well lead to their ultimate demise. I’ll explain why below
— Benjamin Celermajer (@CelermajerB) January 8, 2020
BSV and BCH miners are already irrational
The analysis is predicated on miners putting their self interests first and behaving rationally.
However Binance Research has already found that mining the forks is less profitable than mining BTC which means BSV and BCH miners are motivated by things other than just making money.
Binance theorises that mining BSV or BCH may be “irrational, possibly owing to political factors or other non-economically driven forces that are beyond the scope of this report”.