If you have been reading closely the previous postings, Bitcoin Cash (Bash) has managed to clobber an overnight coup. Undervalued at $300 for the past 2 weeks, while profitability signs slowly showing a wave of change. Then boom – when people in Korea realises this reality hitting, they bought strongly in the past 24 hours or 36 hours.
$400, $450, $500, $550, now over $600. Just around it’s fair value. See the post on how to calculate the fair value.
The next few days will be the Bitcoin Cash Eclipse day (see previous post). When the true inherent difficulty is adjusted. How to calculate fully is complex.
We can make a quick look at the charts. It is now 13% difficulty of the original chain’s difficulty. So expect that to go down. Which means when it is less difficult to do the mining, there is a chance more people can try to mine. Miners who have old rigs. Miners who are very big and can afford to try to mine. Previously it was NOT AFFORDABLE simply because it was not profitable. Now even profitability is showing that it is MORE profitable to mine (base on calculations of the 12.5 coins X the value) – in theory.
12.5 x $4400 = $55 000 for bitcoin
12.5 x $650 = $8 125 for Bash
So why is it “more profitable” according to Coindance? It’s the difficulty. See this Bolt analogy. Besides the actual winner reward coins (12.5 coins), a miner who got the winning block is also rewarded the fees associated within the transactions, within that block. Let’s average it to about 2000 transactions per block. If each transaction costs $5 USD, that is $10 000 in fees for bitcoin, while Bash is still very low. The average transaction (last 2 weeks) was $0.05 or about $50 USD.
(*New Update Analysis: Seem no new miner, though ViaBTC has increased their wining blocks. Now in my own opinion, miners would only move in if there is a credible offset. If each transaction was $3 to $5, there is about $5000 to $10000 in transaction fees in main chain. Since Bash chain has close to nothing in fees, we need to offset in price of the coin itself. If $5000 fees is enough to get miners moving, that means 5000 / 12.5 = $400, another $400 gain to $1000 value for Bitcoin Cash to entice some miners. If we calculate $10000, then it’s that saturation point. Adding $800 to current prices.)
The market cap of a coin tells one thing, though mostly theoretical total value since many coins are lost by users, wallets lost, forgotten, forgotten keys, forgotten password, seizure by men in black, rain, plus even the original Satoshi coins seemingly are not ever going to be used. He might have left the planet. He might NOT NEED the money. See this.
Look at the charts below. The other indicator is volume collected by API on various exchanges that signs up or have open API. (so those who didn’t – could be OTC or other Swiss banks that we wouldn’t have a clue).
Daily 24 hour volume of value of bitcoin is over 2.7 billion. Bitcoin Cash is at 2.5 billion USD. A few months ago, even a few weeks ago, Ethereum’s daily 24 hour was 1 billion and always the highest. Even higher than bitcoin about 800 million.
Now the renewed vigour has moved bitcoin higher. If Bitcoin Cash has a volume exceeding Bitcoin, then it is another flippening event for us to think about the landscape. Wiping the slate clean so to speak and solidifying Bash as the daily usable Bitcoin. The silver. The T-Money of Bitcoin. (*T-Money is a multi-modal card used in Korea for daily expenses such as subway, bus, buying food, convenience stores, post office, tickets)
Addendum: Many are asking then how high or low should Bitcoin Cash go?
Bitcoin Cash’s objective was to allow up to 8MB blocks. Just assuming per 1 MB block is 2000 transactions, so it could allow 16 000 transactions.
User’s objective of using it (if you are using to transfer and send that’s great) is low fees. Lowest fee possible. In cents. Less than 50 cents. Less than 10 cents. So here let’s assume that Bitcoin Cash fees will be always low and testing the theory that the 8MB can allow that to be.
So what else can persuade miners (a blockchain need miners to sustain as well as verify/record transactions) to come over? Is if the price goes up, then naturally miners will come. They will come not for the transaction fees anymore. But if there are no miners? No new miners? It’s TOTALLY FINE!
At the moment, there are 3 miner groups that are doing the work. The biggest is Unknown doing over 95%. Meaning winning over 95% of the blocks.
Let’s say they are a nefarious actor and quits mining since now is appropriate time to cash out (literally) on the previously mined 2 weeks of rewards. And those two weeks prices were too low to profit by selling. Now they could sell it. But not so fast. The blockchain rules is it takes x amount of time or confirmations then the rewards are released. Several days to let’s put it at 2 weeks. (*I need to research but at least this number to play with first)
SO after 2 weeks, GROUP Unknown stops mining, sells all their Bash in Bittrex.
What is the significance? Maybe price will go down a bit. Then difficulty adjusts since less mining power. So the two remaining miners will get via bell curve, 50%. Now it’s easier to mine, therefore potential new miners will re-consider again. This process will go around and around.
Until the next fair value is achieved. I might have to update the formula since at the moment one factor is the price of the original bitcoin chain. When someday, that doesn’t apply anymore then it is depending on the markets and the actual users.
Regardless, Bitcoin Cash will keep Bitcoin in check. Not checkmate. But it darn well has checkmate-d a dozen or so other altcoins.
PentaPrison 
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