Bitcoin price is way down — bitcoin cash way up
The announcement that bitcoin cash would trade on Coinbase was followed by a drop of as much as 25 percent in the price of bitcoin. It fell to a low of $14,000 but obviously had support at that level and recovered to $16,600 when the
Techcrunch article reporting on the launch went to press.
On the other hand, bitcoin cash rose about 50 percent just in the last two hours trading around $3,000. Given these extreme price swings it is not surprising that the exchange felt that it should pause trading. It could be the exchange is also unable to handle the volume.
Details of trading stoppage
According to Coindesk, trading was stopped after four minutes of trading.
The exchange said at 18.30 Pacific Standard Time: "All BCH books will enter cancel-only mode, and all existing orders will be cleared. While in cancel-only mode, no new orders will be accepted. We will post an update shortly," BCH is the trading symbol for bitcoin cash.
The service outage was only trading in bitcoin cash, as trades continued in bitcoin, ether and litecoin, the other three coins traded on the exchange.
No doubt the flock of new users put a strain on the resources of the exchange.
What is bitcoin cash?
The coin was created when bitcoin experienced a hard fork in the beginning of August creating the new coin. There were a group of developers who wanted bitcoin blocks to be increased in size eight times. This would allow more and faster transactions and lower fees. These developers created bitcoin cash when the other bitcoin miners and developers refused to go along.
Another attempt to increase the size of bitcoin blocks did not go through in November and another possible hard fork was avoided. Some analysts touted bitcoin cash as an alternative to bitcoin. Litecoin was also mentioned as a possible successor too. Both are faster and have lower transaction costs.
Coinbase has changed its tune on bitcoin cash
Back in early August when bitcoin cash was first created, Coinbase said they would not support it. However within a couple of days they changed their mind and promised that customers would be able to withdraw it by January 1st next year. They did not however, promise full support.
This early development with full support surprised many.
Coinbase's rationale for adding bitcoin cash to its trading roster
Coinbase claimed that they considered ”developer and community support, security, stability, market price and trading volume” in deciding to fully support bitcoin cash.
The company said: “Coinbase operates by the principle that our customers should benefit to the greatest extent possible from forks or other networks events. This is essential in our mission to make Coinbase the most trusted, safe, and easy-to-use digital currency exchange."
The exchange intends to support a number of digital currencies in the future so it makes sense that they have now added bitcoin cash which is the third largest coin by market cap. Coinbase already offers ethereum (ether) the second largest cryptocurrency.
Present prices
As I write this about 10:30 Central Standard Time
coinmarketcap lists the price of bitcoin cash at $3,339 up over 50 percent on the day.
On Universal Coordinated Time (UTC) it is already December 20th about 5:00 a.m. The opening for bitcoin was $17,608, far off its recent high of over $19,000. Its low today was $15,577 according to
Coindesk and are an average from several exchanges so you may find different figures elsewhere on a single exchange.
It remains to be seen if bitcoin can continue to recover from its losses or if it will drop further due to competition from other cryptocurrencies such as bitcoin cash. Many cryptocurrencies appear to be gaining value. The attention to bitcoin and the launch of bitcoin futures trading appears to have created more interest in many other cryptocurrencies as well, perhaps to the detriment of the price of bitcoin.
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