There are two bitcoins now?
It's safe to say uncertainty cast a pall over the cryptocurrency markets last week when on August 1, a group of developers and miners split the blockchain and created a new cryptocurrency.
It was the first (high-profile) bitcoin fork to date, and in response, the price very well could have entered a period of unprecedented churn. With bitcoin and bitcoin cash competing, it wasn't hard to foresee this creating market dislocations and downward pressure on price.
What happened, however, was the opposite, as in the last few days markets have surged past all-time highs. In fact, analysts have indicated a major upswell in confidence and a broad consensus that the upward march of bitcoin's price could continue.
Brad Chun, CEO of blockchain startup Mooti Digital Identity, went so far as to argue that institutional money is likely to pour into bitcoin as a result.
Chun told CoinDesk:
"For early tech adopters who can't fathom a market cap of over $50 billion or $100 billion for bitcoin, they haven't seen anything yet. While we might see profit taking short-term, I view any dips as buying opportunities."
Chun, who plans to hold bitcoin through the remainder of 2017, has a $5,000 end-of-year price target on bitcoin, a price figure that includes bitcoin cash and any other potential "fork currencies" created as a result of disagreements over the network's future.
Kevin Zhou, of the cryptocurrency fund Galois Capital, is also bullish on the price of bitcoin, particularly after Segregated Witness locked in on the main bitcoin blockchain yesterday and the split went by without incident.
Zhou said bitcoin could see price gains of 200 to 300 percent year-over-year, for the next two years. And added that $3,000 to $4,500 "seems reasonable" as a price target for the year, though he hedges a bit on that range.
Harry Yeh, managing partner at Binary Financial, is more categorical now that the hard fork has passed.
"Expect a big move past $3,500 – possibly this week," he told CoinDesk. Yeh believes $4,000 "is on the horizon" for bitcoin by the end of the year.
'Fork Mania'
But perhaps the most prevailing view in the wake of the bitcoin cash fork is that a major headwind has just come off the table.
The argument goes like this: bitcoin survived a fork without a major technical or price catastrophe. As a consequence, the market has stabilized, clearing the way for higher prices in the future.
Yeh explained:
"Traders trade based on technical and fundamental analysis. With the hard fork issue gone and the technicals being very bullish again, long term there is definitely a lot more confidence amongst traders."
Once again, confidence has risen because the downside risks weren't realized.
Tellingly, and in keeping with this thesis, Yeh points out that this is only the case until "the next" fork arises to darken markets.
Here, Zhou's comments reflect how forks can be both positive and negative factors in the market. While forks can create uncertainty and risk, he noted forks also have an upside – the ability to spawn new assets.
"I also think after the success of bitcoin cash forking off bitcion, we might see a lot of other forks happening. 2014 was altcoin mania; 2015-2016 was blockchain mania; 2017 is ICO mania; maybe 2018 will be fork mania," he said.
When up signals down
Elsewhere, Petar Zivkovski, director of operations at Whaleclub, struck a more nuanced note on price direction and short-term price targets.
"2017 has been a stellar year for bitcoin. Barring a black swan event (this is a big assumption in the industry), I think the bull run will continue through the end of the year since it's the predominant trend," he remarked.
While Zivkovski has admitted that the price could see a short-term pullback, he said he is watching out for whether the $3,000 price will hold. If it does, he said $4,000 might not be far off.
Interestingly, Zivkovski struck a novel note that none of the other analysts picked up on: The possibility that soaring bitcoin prices could cause a negative feedback loop for the price of bitcoin.
In a nutshell, his thesis is that the "incredible price rise" in bitcoin is attracting the attention of both governments and regulators on a global basis. As a consequence, "a wider crackdown on bitcoin exchanges," he said, could mitigate price gains.
In other words, bitcoin could become a victim of its own success.