Observations on the Price Effects of a Fork

0 154
Avatar for ColinTalksCrypto
3 years ago

Observed law:
The amount the token price drops in light of a fork seems to be proportional to the success (price and hashrate) of the chain that splits off.

Some examples:

  • In the case of Bitcoin SV, BSV was more “successful” (price and hashrate) than BCHA. As such, BSV “took more value” from Bitcoin Cash than BCHA did.

  • Before the BSV fork, BCH was actually 400-600 dollar range. After the fork, the price of BCH dropped considerably. I’d argue the BCH price still hasn’t fully recovered from this split.

  • In contrast to this, BCHA was a very unsuccessful fork (low price and low hashrate). As such, BCHA caused a smaller drop in price to Bitcoin Cash. BCH was also much quicker to recover from it, price-wise.

  • I believe this same "law" applies with the original BTC and BCH split as well.

Conclusion:

From an economic point of view, this is why it's important to avoid forks and also why it is important to actually dis-incentivize them from happening.

4
$ 0.32
$ 0.32 from @TheRandomRewarder

Comments