Overnight, Bitcoin Cash became the third largest cryptocurrency by market cap. Reaching a high of close to $800, traders are in disbelief at the rapid price rise. Why is Bitcoin Cash’s price so high? Is this just a bubble that is waiting to burst, or will Bitcoin cash overtake its predecessor?
Initially, after the fork first occurred Bitcoin cash was trading at a steady $250. As soon as the fork commenced and the network split gracefully, exchanges started adding Bitcoin Cash trading pairs. As with any cryptocurrency, the more exchanges add it the higher the price rises. BCH was no different, when Kraken and Bittrex added the asset, the price spiked and doubled to $433.
The fire was already burning when Bitfinex finally integrated BCH, ultimately pouring a gallon of fuel into the pit. The explosion propelled Bitcoin Cash’s price to over $700 doubling the asset once again. As great as all this sounds, when something is too good to be true, it usually is.
While it is possible to trade Bitcoin Cash that was credited by exchanges, it is still impossible to deposit BCH to an exchange in order to sell it for Bitcoin or any other currency. For example, even though Bittrex is leading the market with the highest trading volume, the Bitcoin Cash wallet is “under maintenance” and it is impossible to deposit any coins into it.
This means that even though the total circulation of Bitcoin Cash is around 16 million tokens, the effective supply is much much smaller than that. Moreover, once the exchanges open up their wallets, it is inevitable that users will flood it with Bitcoin Cash to sell. It would be smart to keep an eye on when exchanges, especially Bittrex, enable Bitcoin Cash deposits as that could be a pivotal point in the market.
Another important decision that will influence BCH’s price is how Coinbase will handle the situation of whether or not to credit their users with BCC. Bittrex had no issue crediting the new coin to its users at a 1:1 rate but Coinbase is claiming that will create issues with their hot and cold storage.
Update for customers asking if Coinbase is keeping their bitcoin cash (BCC) pic.twitter.com/gamiKDTVmx
— Coinbase (@coinbase) July 28, 2017
Tim Wu, a legal scholar, claims that Coinbase is opening themselves up to lawsuits by not crediting users with BCC. He compared Coinbase to a broker that refused to issue a new stock to their owners.
Imagine a stock split where the broker declined to issue the new stock to its owners– that the @coincase position right now
— Tim Wu (@superwuster) July 30, 2017
Some argue that Coinbase is not responsible for crediting users with Bitcoin Cash because it is simply an exchange and a wallet that is used to hold people’s funds. However, the issue here isn’t the fact that Coinbase refuses to credit users with the token, its the fact that most users weren’t able to even move coins off the exchange before the fork.
The problem is, if users move their coins from Coinbase now, they would not get credited any BCC as the coins. In fact, Coinbase would essentially be credited those BCC if users withdraw funds from the platform. Coinbase has stated that they do not plan to keep or do anything with the token, but that is just bad business.
If you have million of dollars in an asset why not liquidate it? If you can’t liquidate it, then why not distribute it to its rightful owners? We will be closely monitoring the Coinbase situation, follow us on twitter @themerklenews for the latest updates.
