Bitcoin faces many challenges right now, and this selloff comes as no surprise. The stage was set perfectly.
- CME and CBOE released futures trading with BTC at an all-time high
- The Bitcoin network has faced a perpetually clogged network
- Network fees have been rising for months
- Faster, nimbler, superior blockchains have absorbed market share
- Bitcoin Cash has gone directly head to head with ‘Bitcoin Core,’ as Roger Ver calls it
With so much uncertainty surrounding the world’s top digital currency, some are starting to doubt its ability to rebound. Others are sticking to their guns and “HODLing,” the modus operandi of our truest veterans. Historically it has proven to be resilient, albeit volatile, but the cryptocurrency ecosystem is rapidly evolving. Bitcoin has begun falling behind, and it may take a developmental action to reverse course.
For 8 years Bitcoin has grown and traded free from the influence of short sellers. Now, just days after they join the party, Bitcoin has toppled 40%. Coincidence? I think not.
Cryptomongers have long dreaded the arrival of futures trading for this very reason. Futures are the norm for other markets, but the manipulation that surrounds them is transparent and unwanted. When market makers are able to profit regardless of movement direction, the incentive to manipulate is significant.
Now wall street is getting involved as well. E*trade and TD Ameritrade have already added support for CBOE futures, and the NYSE is planning a full ETF rollout soon. While this could lead to an increase in FUD and manipulation, it does at least represent mainstream adoption.
280k Transactions Frozen
For weeks Bitcoin has faced a clogged network. Early November was the last time the Bitcoin network processed transactions without a backlog, and the problem is only getting worse. The good news is the problem is only “bad” because Bitcoin has garnered so much attention and adoption recently. Coinbase has reported millions of new registrants, and Bittrex had at one point disabled new registrations. Coinbase has also disabled transactions of LTC, BCH, and ETH do to inability to process them all.
The crypto ecosystem is simply experiencing too much success right now, and it is nearly crippling the existing system.
Rising Network Fees
NewsBTC recently reported a surge in Bitcoin average transaction fees to nearly $50 while Coinbase is charging a more ‘reasonable’ $30 at press time. Microtransactions are not even a consideration at this point, and moving Bitcoin between wallets is impractical at best. Erik Voorhees summed this up perfectly with a recent tweet.
Better Options May Slowly Replace Bitcoin
Realistically, what does Bitcoin still have going for it? It is still widely viewed as digital gold, but that is it. If Bitcoin can return to its former market cap glory it will further solidify this reputation, but it still will not solve the underlying fundamental issues. Furthermore, from a capital preservation perspective, other coins are outshining it. Let’s take a look at one in particular: Ripple.
Presently, Ripple is the microtransaction king. It offers the quickest and cheapest transactions (nearly free) coupled with the widest adoption of any coin in its class.
Its network boasts a backing of more than 100 banks and financial institutions, and this figure has been growing rapidly. It has backing from more than just the banks, however. People around the world have embraced it for its disruptive potential and have clambered to buy in sending it to new highs. In an effort to make it easier to acquire and use, a petition has been drawn up to get Ripple added to Coinbase. Rumor has it that Coinbase will be adding new coins soon, and Ripple is one of the most attractive options given its attributes.
Throughout this recent selloff Ripple has behaved remarkably well. While it has sold off with the broader market, it has outperform every coin in the top 10 and most others as well.Take a glance at the chart and ask yourself which of these coins is most closely resembling a reliable store of value presently?
Bitcoin Cash Threat
Roger Ver has been persistent in his belief that Bitcoin Cash is the coin that most closely aligns with Nakamoto’s original vision for Bitcoin. He has worked hard to see it through to adoption and combat Bitcoin directly. In the most recent blow to Bitcoin, Coinbase added BCH support sending it skyrocketing in comparison to Bitcoin and catalyzing its selloff.
Bitcoin is comfortably off its intraday high at $13,300 presently, but it has yet to break out of its downward channel. HOLDers are certain that we will surpass previous highs by year’s end and bears think the selloff has only begun. Who do you think is right? Will Bitcoin defend its reputation as digital gold in spite of its fundamental limitations, or will its inability to scale lead to its downfall?
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