Why Are Bitcoin Prices Rising Post-Fork? We Make Sense of It All

Bitcoin price rising
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Bitcoin Prices Smashing New Records as Institutional Demand Gains Traction

Bitcoin prices keep reaching lofty levels in 2017, with no slowdown in sight. The latest Bitcoin record high took out a significant price prediction by Goldman Sachs Group Inc (NYSE:GS) of $3,900 for 2017. And there’s still four-and-a-half months left to go in the year. With Bitcoin literally trading in uncharted territory, the investor community is left to wonder, “How high?”

Now that the Bitcoin fork “issue” is over, what happens next? In case you missed it, Bitcoin sank around $1,050 or 35% peak-to-trough in July 2017 as investors feared community dissension to an impending technology proposal that would have “forked” the cryptocurrency into two competing pieces. The proposed new technology, called SegWit2x, aimed to fix (or at least, buy time to fix) issues related to Bitcoin’s slow transaction processing times and block size limitations.

Well, that’s what exactly what happened. Bitcoin Cash (BCH) was officially born. Regular Bitcoin (BTC) owners received one BCH coin for every BTC coin they previously owned. Poof—about $4.0 billion in assets was generated for coin holders out of thin air.

Why Is Bitcoin Rising?

In a nutshell, investors are relieved that the Bitcoin split went off without a hitch. Much like other technological hysterias throughout the years (remember Y2K?), investors’ worst fears failed to materialize. There were no significant security breaches, nor was the feared Bitcoin “brand identity” compromised. The lack of issues paves the way for a more important upgrade, step two of SegWit2x, to fully go through in a couple of months.

Also ReadEthereum vs. Bitcoin Cash

Bitcoin stock has been rising with institutional investors over the past year. But we believe the hard fork issues had been holding back deep-pocketed funds from purchasing a stake. With the much-maligned fork issue solved, there’s higher investor confidence that the more important SegWit2x download will succeed a couple months from now. That will make Bitcoin more user-friendly, cheaper to use, and more retail-friendly with faster transaction speeds.

Big institutional money, sensing Bitcoin may never trade at these “low” prices again (under $3,000), have apparently jumped on board. The resulting price action has stayed robust, despite the lofty gains already in 2017.

This speaks volumes about how institutional money views Bitcoin’s staying power and ability to grow.

Bitcoin Prices

As everyone knows, prices have gone through the stratosphere in 2017. Bitcoin started the year under $1,000/BTC (around $970.00) and quickly zoomed up on future growth optimism. The steady march higher led to a test of old highs by March 2017. After a brief retest of the January lows, Bitcoin prices surged once again.

Propelling prices forward from April 2017 to the August 1 pre-fork was undoubtedly one of the most remarkable price predictions ever administered in modern markets. High-profile Snap Inc (NYSE: SNAP) investor Jeremy Liew and Blockchain CEO Peter Smith estimated Bitcoin had a real chance of trading at $500,000/BTC by 2030. This was based on wholly reasonable assumptions, such as 400 million worldwide users and not-unthinkable penetration rates.

The target itself was derived by dividing $410.0 trillion in market cap by 20 million coins (maximum possible Bitcoin circulation is 21 million coins after 2040). “We believe Bitcoin awareness… will make Bitcoin a strong contender for investment at a consumer and investor level.” Liew and Smith noted. (Source: “Bitcoin Price Will Reach $500,000 Realistically: Snapchat’s First Investor,” The Cointelegraph, August 9, 2017.)

Bitcoin Price Chart

bitcoin price chart

Indeed, that’s exactly what happened. Prices post-prediction shot up from about $1,200/BTC to over $3,000/BTC in just two months! Investor demand was insatiable. After the aforementioned sell-off in July, Bitcoin prices post-fork have gained momentum once again. As of this writing, Bitcoin is trading at around $4,300/BTC, having topped $4,200/BTC early in the day.

As an added side benefit to owners, BCH is also doing well. Bitcoin Cash is currently trading at $300.02/BCH, although analysts believe it could trade under $100.00/BCH in due course. Not all the exchanges support it, and this “alt-coin” splinter—much like Ethereum Classic—may be destined as a second-class citizen.