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Bitcoin Head & Shoulders

by Ashraf Laidi
Jul 10, 2017 13:41

As Bitcoin is set to post its first 3-day consecutive daily drop in nearly 4 months, digital currency traders will want to know more about the biggest potential development currently surrounding Bitcoin. The likely introduction of a “fork” -- a modification of the code aimed at addressing the need to scale Bitcoin blockchain network, is being widely discussed to address the issue of speed. The likely deadline for such a decision is Aug 1st.

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Bitcoin Head & Shoulders - Bitcoin Daily (Chart 1)

Soft vs Hard Fork

A “soft” fork would be a minor adjustment to the code, while a “hard” fork entails the splitting of the code, which would be a general update to the program. It is increasingly expected that a fork, soft or hard, will impact Bitcoin's value in the short-term, yet needed in order for Bitcoin to survive as a currency.

A soft fork, also known as SegWit, would not split the code, yet, has fewer supporters as it will fail to effectively increase the block size (and transaction speed) as it would under a hard fork. Bitcoin insiders consider transaction speed as a major determinant of Bitcoin's maintaining its lead as the reserve currency in the cryptocurrency universe.

As Bitcoin investors hold the currency in various exchanges, they face differing rules on forks by the various exchanges and online wallets such as Coinbase, Bitstamp and Gdax.   One possible way to protect against the possible problems of a fork split to store Bitcoin in offline wallets (cold storage) to enable Bitcoin to function in both codes.

Trading Bitcoin & Ethereum on Leverage

 

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