BTC - The Forks, Fundamentals and Market Liquidity

2017年10月14日

As we approach the upcoming 2 forks we want to monitor how this may have an effect on the market if we are traders. Most Investors have or will pull their money into the Bitcoin core version wallet prior to this, as recommended by bitcoin and other experts. But as a trader what can we expect?

Segwit was created to free up space on the block chain allowing faster processing times and allows for more transactions to be processed. In lieu of 1MB' of transactions in 10 minutes 4 MB' can be processed in 10 minutes. This allows for more transactions and gets rid of the back log which is why it had a lot of community support I believe 95%. I am not as tech savy as many of you are so feel free to correct. But I believe this is the jest of it and hence the creation of BCH'. Obviously BCH' didn't run like BTC' after the fork that tells you something. But for all intensive purposes you received free coins which still hold a good value today. But accessing these coins quickly is important as explained further down.

This tells us that BTC' is the gold standard of cryptos and will probably always be. This is why it makes up 25% (now more) of my core holdings.

So what about segwitt2 and how will this be accepted but more importantly how will this impact the market?

Since the block chain size has already been addressed in BCH' I'm not sure this will be the same magnitude and most likely insignificant. But what we learned through the first fork is that leaving your money on an exchange may not only pose the issue of what chain you may own after the split, but a delay in getting your new coins. Lack of liquidity. Many will want to dump fast and for good reason. Dumping BCH' shortly after the fork and putting into BTC' resulted in a 100% profit in less than a month. In order to get access fast most will put their coins into the bitcoin core wallet. The Liquidity issue! I'm speaking of altcoins that cannot trade directly in USD.

There are 3 currencies that trade directly in USD on coinbase. ETH' LTC' and BTC'. This exchange is insured! Key point for those who have 6 digits tied up into cryptos. Note the last 5 days the percentage gains of the big 3. BTC up 20% (I want my altcoin), ETH up 15%, we are forking there as well, but LTC is up 26% as we speak. It's quickly converted to USD' unlike DASH' and ZEC' which trade in tether (at least on my exchange). Not sure I'm holding tether through this. The rest of the alt-coin market is mixed such as OMG' NEO' are flat or down. See a pattern market liquidity?

As we approach the fork date I believe more and more people will likely pull their bitcoin from non-regulated exchanges causing liquidity in the market as a whole as most of the trading is done in BTC'. Do you see an issue? Maybe, maybe not, but very likely the liquidity issue will lead to large swings and I'm not chancing trading during this time as BTC' is 50% of the market.

I'm not telling you what to do, I'm just simply making a case of why I am battening down the hatches, and staying away from the markets until the storm blows over. I'm fine with the big 3 here, but other alts? NOT! Thin markets are dangerous markets especially with stop losses and margin trading. (i'm not selling core holdings to be clear)

So we could possibly see another leg up in BTC' ETH' and LTC' prior to the forks. We could also see alt-coins continue to decline. I am definitely NOT swing trading any alt-coins from now until the fork! Why risk it? I know if my money is in the big 3 off the exchanges I am best protected, and many others are thinking the same. Maybe a few day trades, but I want in and out and out entirely 3-4 days before the fork!

I hope to get some input from you that have been in the market longer than I and your insight.