Is Bitcoin (BTC) the reason behind the crypto selloff?
The crypto market has experienced some major losses in the past 24 hours. At the time of writing, all coins but two within the top 100, are down right now. To get a taste of the bloodshed, take a look at the data from CoinMarketCap:
The top ten cryptocurrencies are all experiencing major losses. Leading the pack in losses is Bitcoin Cash (BCH) and Litecoin (LTC).
There’s no denying that the markets are struggling – but why?
Bitcoin may be the reason.
Bitcoin Transaction Fees Encouraging Crypto selloff?
Bitcoin transaction fees are at their lowest level since October 2017. According to BitInfoCharts, which was last updated on February 20th, Bitcoin transactions fees are going for US$3.042.
Bitcoin transactions fees have been declining ever since hitting their all-time high back in December 2017 (US$55.16). However, even as recently as a couple of weeks ago, Bitcoin transactions fees were in the $10 range. That’s not terribly expensive, but $3.00 is even better.
I would imagine that there are a lot of people taking advantage of the relatively cheap Bitcoin transaction fees. This may explain why many of the altcoins are declining today – people are selling their altcoin assets so they can gobble up Bitcoin while it’s cheap to process.
Bitcoin Transaction Times
In addition to the cheap Bitcoin transaction fees, Coinbase and Bitfinex will be updating the exchanges with a software called SegWit. SegWit (Segregated Witness), is touted as a way to speed up Bitcoin transactions while also lowering fees by a further 20%. It does so by increasing the block size (so more transactions will be able to fit per block). This will drastically improve Bitcoin’s efficiency as a cryptocurrency if SegWit does what it is meant to do.
Bitfinex accounts for almost 38% of all US dollar-Bitcoin trades. Coinbase accounts for about 17%. Coinbase’s rollout of SegWit won’t fully come into effect until the middle of next week; however, Bitfinex’s support of SegWit was announced yesterday.
The adoption of SegWit by these two major exchanges will no doubt have strong long-term effects for Bitcoin. For right now, this could also be accounting for the altcoin selloff currently happening. People are getting ready to take advantage of the lower Bitcoin transaction fees and processing times by selling their other cryptos now.
Neither of these points changes the fact that Bitcoin is also currently down. As for why Bitcoin is down right now, I’m not sure. But if Bitcoin is down, it’s little surprise that many of the other coins are also down. When Bitcoin drops, people tend to panic, selling not only their Bitcoin but also their other crypto assets.
Featured image: artispixel