The planned bitcoin protocol upgrade Segwit2x got cancelled yesterday due to insufficient consensus. This led to an unwinding of the previous ‘free money’ trade. Both alts we follow on Thursdays have since rallied.
ETH Rallies on Segwit2x cancellation
The planned 2MB block increase got cancelled yesterday. The announcement on linuxfoundation.org says:
‘Although we strongly believe in the need for a larger blocksize, there is something we believe is even more important: keeping the community together. Unfortunately, it is clear that we have not built sufficient consensus for a clean blocksize upgrade at this time. Continuing on the current path could divide the community and be a setback to Bitcoin’s growth’
The post is signed by the lead Segwit2x developer Jeff Garzik, Jihan Wu, a major Chinese miner and Mike Belshe, CEO of BitGo. Erik Voorhees confirmed the news on his twitter.
After an initial relief rally from $7,462 to $7,887 on FXOpen, we saw an unwinding of the ‘free money’ trade. Bitcoin fell to a low of $6,980 in the next hour. Later in the day, it stabilized around $7,200 dollars per coin. A similar (but upside down) pattern was observed in ETH/BTC. Here we first fell to a low of 0.03773 BTC then rallied to a high of 0.044 BTC. The pair is trading at 0.0428 BTC right now.
Technically ETH/BTC is still in a downtrend on the daily charts. A decisive breakout above the 0.05 round figure is needed to end it. A move beyond the 0.05545 BTC swing high would start a new rally. No change on the longer-term timeframes. Here the pair is in a downtrend on the weekly charts but in an uptrend on the monthly.
Dash Follows Same Pattern
Dash followed the same pattern is ETH after the news. First, we got a dip to 0.03757 BTC followed by a rally to a high of 0.04559 BTC. We are currently quoted slightly below the highs at 0.04487 BTC.
Dash vs BTC is in a downtrend too. To end it the bulls need a decisive move above the 0.05 BTC round level. A move above 0.054 swing high could start a new rally in DSH/BTC. On the longer-term charts, we are seeing the same picture as ETH/BTC, up on the monthly but down on the weekly charts.
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