Table of Contents
- The Situation
- Proposing Strategies
- Verdict
- References
1. The Situation
History repeats itself, first as tragedy, second as farce - Karl Marx
Yet another hard fork from BTC, this time is Oct 25th 2017 under the name of Bitcoin Gold. The new coin seems to have a wide range of supporters, mainly trigger by its new proposal of using Equilhash (GPU-friendly mining algorithm); thus, sounds like it is trying to put the power to the mass again.
Nevertheless, just after the news got released, many investors tried to jump on the BTC-wagon without any hesitations, hoping to get into another "free-cash" incident - same as Aug 1st 2017 forked with Bitcoin Cash. If you are interested in what happened during the "Aug 1st bloody experience", I suggest you to look up the market cap of all the coins back then, and this article by @penguinpablo is a really nice summary. Just for illustration, here is what the market looked like from 20 - 28 July 2017 (few days before the fork):
To sum up, the expected movements would be:
- Investors abandon altcoins and jump to BTC wagon --> drives price of altcoins go up a little bit for a few days before making the whole altcoins market crash (relative to BTC and also relative to fiat)
- Most "jumping bandwagon" activities will start slowly from now (Oct 2nd) up to Oct 25, as you can see here, today BTC already rises quite a bit since many news outlets are releasing info about the fork. I expect more activities will take place around the last 10 days before 25 (so mid-Oct).
- By mid-Oct, the altcoin market will experience quite a hard crash, since many investors would either convert most of their investments into fiat and wait for the storm to pass by or simply join the BTC-wagon.
- After Oct 25, people would sell their free Bitcoin Gold and jump back to alts. This time, the alt market would experience a sharp increase and everything will be normal again (still.. volatile market, but hey, it's crypto!)
2. Proposing Strategies
Here I would like to propose the following 3 strategies that you can take during this "storm". I would not really recommend any particular route and since I am also observing the market, any comments and discussions are welcomed!
1. "Alt-for-fiat " - leveraging the doom of alt-crash
- Requirements
- Fiat reserve (prefer putting on exchange and wait)
- Steps
- Start pushing some fiat capital from the outside world to your exchange accounts from now and should set the deadline around mid Oct.
- Wait until the market crash (up to Oct 25), I would personally prefer Oct 23 - 24. Then use your fiat to buy all cheap alts
- After the fork, wait a few days for alts to normalize back and sell your alts for fiat
- Success rate - pretty high and pretty safe but require you to have large fiat reserve and set a profit line for each alt you want to target
2. "Fiat-for-life " - escaping the doomsday
- Requirements
- Altcoins - just put them to exchange when you want to initiate this strategy
- Channels to convert altcoin back to fiats/usdt
- Steps
- You can either do it now or wait until 2 week before Oct 25. For now, you can continue doing trading as usual
- Transfer a portion (or all) of your alts to fiat and leave them there.
- If you want to have quick reaction time, you can try to exchange them to USDT instead. However, I wouldn't try this since USDT is really shady in my opinion
- Wait after the storm has passed and jump back in (same as the strategy above)
- Success rate - you would likely to avoid the crash (if there is any) and the sea will be a bit less red when you jump back to crypto. Basically, this strategy is like - put all alts to fiat, quit crypto for a few weeks then jump back. I believe most conservatives traders would follow this as well (up to the uncertainty of the fork)
3. "Bandwagoning " - high risk, high reward... why not?
- Requirements
- Bitcoin
- Steps
- Start accumulating BTC from NOW when it still cheap
- "Hodl" until the fork then you will have both Bitcoin Gold and then jump back to alts
- Or if you are still concerning about the success of the fork, you can still leverage the market by jumping back to altcoins right before the fork to gain cheap alts.
- Success rate - high uncertainty since many are not sure whether this fork will repeat the same pattern as before since the new Bitcoin Gold now still has some issues (leadership, roadmaps..etc).
3. Verdict
Well, whatever it is, I believe this will be another exciting times for the cryptoworld. Honestly, in my honest opinion, if the bitcoin guys keep on "forking around", people will look at our cryptoworld as a joke where kids are fighting over a piece of cakes.
Stay safe and be wise :)!
4. References
- Another bitcoin hard fork is to take place soon: new Bitcoin Gold aims to make bitcoin network truly decentralized by demonopolizing mining industry. https://www.coinspeaker.com/2017/09/29/bitcoin-gold-project-plans-fork-bitcoin-october-25/
- First Cash, Now Gold? Another Bitcoin Hard Fork Is on the Way https://www.coindesk.com/first-cash-now-gold-another-bitcoin-hard-fork-way/
- Discussion on bitcointalk about the Aug 1st fork https://bitcointalk.org/index.php?topic=2049445.0