Anyone that has followed Bitcoin over the years knows that price volatility is guaranteed. But as the summer months of Bitcoin typically cool down, this summer is different as things are heating up causing huge fluctuations.
Going back two years ago to former Bitcoin developer Mike Hearn’s blog post, he explains how Bitcoin is cyclical where during the summer growth slows and picks back up during the autumn and winter. This typically means that as growth slows so does the price with much less volatility.
However this summer is far from normal. The issue this year is that Bitcoin’s scaling debate is coming to a head, with major events possibly happening in just a couple weeks, specifically August 1st.
If you don’t follow Bitcoin closely, this may be news to you. There are tons of write-ups on the upcoming potential forks and events in August, but we recommend reading blog posts by Jimmy Song as he has written up many different articles on the possible events happening soon.
In particular, a good starting point would be:
- Why Any Contentious Change Will Become a Permanent Fork
- Why the UASF Segwit Scenario is Hopelessly Naive
- Bitcoin, UASF and Skin in the Game
- UASF BIP148 Scenarios and Game Theory
- Segwit2x: What you need to know about the 2x Hard Fork (aka 2MB non-Segwit Transaction Capacity per block/8MB Total Block Size Hard Fork)
- UASF/Segwit2x Scenarios and Timelines
These should set you down the path of understanding what is and will happen, as Song has gone through almost every possible scenario of what will be going on with Bitcoin in the near future.
These changes are having a real impact on Bitcoin’s price, unfortunately (or fortunately, depending on how you look at it). There has been a lot of news recently on the Bitcoin scaling debate’s “civil war” which has caused more price volatility than normal because investors and speculators don’t like uncertainty, which has caused many to pull out of Bitcoin until any possible forks are done in August or switch to other digital currencies such as Ethereum.
Known as the “Bitcoin Oracle,” Vinny Lingham responded to us about the price saying just wait until it [Bitcoin forking] actually happens.
— Vinny Lingham (@VinnyLingham) July 14, 2017
Since then the price after dropping down to $1800 USD on some exchanges, today has dramatically risen to near all time highs currently sitting at just under $2600, as shown below.
The price rising today has several factors built into it, such as a possible resolution to the Bitcoin hard fork issues which may have resolved prior to August (see UASF/Segwit2x Scenarios and Timelines link above for explanation). Another reason for the price spike may due to yesterday’s Ethereum Parity wallet hack, which may have pushed some ETH users back over to BTC for a better store of value.