Bitcoin’s price is taking a beating, having shed about one-fifth of its value over the weekend. At the same time, its biggest rivals in the cryptocurrency space are ascendent: The price of a single ethereum token, the second-largest cryptocurrency by market capitalization, touched an all-time high above $50 over the weekend just as bitcoin’s losses were beginning to accelerate.
Bitcoiners have widely attributed the drop to fears that the bitcoin network might split in two, which is ironic: Ethereum suffered that exact fate over the summer when a contingent of its users refused to accept a mandatory software update that would’ve, among other things, amended the ethereum blockchain to return some of the $50 million worth of tokens stolen during the DAO hack.
Bitcoin US:BTCUSD traded as low as $947 a coin on Saturday, down from around $1,260 a coin on Thursday. That was its highest level since March 10, when the Securities and Exchange Commission rejected a proposed rule change that would’ve allowed for the creation of the first bitcoin exchange-traded fund, sparking a brief selloff.
The two moves are likely interrelated: Data provided by CryptoCompare, a company that supplies data and analytics about the cryptocurrency market, suggest that ethereum has largely benefited from bitcoin’s decline: The bulk of trading in ethereum has been conducted in bitcoin, trading volumes show, suggesting that worried investors are swapping their bitcoins for ethereum.
Ethereum isn’t the only cryptocurrency benefiting from bitcoin’s selloff: Dash, the third-largest cryptocurrency by market cap, broke to an all-time high above $100 a coin on Monday. Monero, the fourth-largest digital currency, touched an all-time high above $20.
The bitcoin selloff started around the time that AntPool, the largest collective of bitcoin miners, on Friday adopted a controversial software update known as bitcoin unlimited. The proposed update is what’s known as a “hard fork,” meaning that, once it receives a certain baseline of support, everyone running the bitcoin software will either need to accept bitcoin unlimited, or risk being shut out of the bitcoin network.
As of Monday, bitcoin unlimited has the highest level of support among any of the proposed solutions to what’s known as the scalability problem: The fact that the bitcoin network is extremely limited in terms of the transaction volume that it can handle.
Critics of bitcoin unlimited feel it would strengthen the control that a small group of miners have over the network.