It was a crazy weekend for digital currency markets as Bitcoin Cash, a would-be rival to the original bitcoin, briefly soared as high as $2,500 on Sunday—only to tumble nearly 60% on Monday. The original bitcoin, meanwhile, fell as low as $5,550 before recovering and is now trading around $6,700.
The market convulsions are the latest fallout from a bitter fight among cryptocurrency insiders over SegWit2X, a proposed update to bitcoin’s core design.
After a plan to implement SegWit2X failed last week, its proponents—who most notably include Chinese mining syndicates—appear to have stampeded into Bitcoin Cash, a knock-off version of bitcoin created this summer. The frenzy cooled by Monday, however, as the price fell as low as $1,120 and was sitting around $1,250 as of mid-morning.
Here is a screenshot from the website Coinmarketcap that shows the wild ride of Bitcoin Cash, which had been hovering around around $650 during the first part of November:
Bitcoin Cash supporters claimed over the weekend that the surge in support reflected an ideological stance in favor of the newer currency, while detractors suggested the price jolts amounted to a pump-and-dump maneuver by Chinese miners and others:
Meanwhile, others on Twitter are suggesting that much of Bitcoin Cash’s weekend gains was fueled by speculators in Korea, who could incur large losses if the currency doesn’t regain its momentum.
The volatility also led to a boom in business for certain digital currency exchanges. According to the CEO of Chainalysis, a firm that provides forensic analysis of digital transactions, the weekend resulted in fat trading fees:
The upshot for now is that the prospect of Bitcoin Cash dethroning the original bitcoin as the “real” version of the currency appears over now though, given the incredible volatility of cryptocurrency markets, it’s impossible to predict what will happen next.
Adding to the uncertainty over Bitcoin Cash is the fact many ordinary cryptocurrency investors technically own the spin-off currency, which was assigned on a 1-to-1 basis to everyone who owned bitcoin, but are unable to access it. This is because some exchanges, notably San Francisco-based Coinbase, are not supporting it and are only making Bitcoin Cash available for withdrawal in 2018.