Before Bitcoin Gold, which appeared 3 days ago, there were some interesting movements in the market.
6 days before the Bitcoin Gold fork, Bitcoin broke the all-time record, crossing the $ 6,000 limit and even reaching the $ 6,200 level.
If you have witnessed Bitcoin forks that took place before this, you are well aware of what happens when there is a separation from the Bitcoin network.. Normally, crypto investors, especially Bitcoin investors, complain about it.. On platforms such as Reddit, Medium, Twitter, Facebook, Telegram, people share their opinions on this subject, and to be honest, there can be some very insulting comments.
However, when there is a separation from the Bitcoin network, something else happens.. At the moment of separation from the network, you receive an amount of tokens in the newly formed network equal to the token you have in the Bitcoin network.. This is because the newly created network is an exact copy of the original Bitcoin network until the fork takes place.
If the wallet you are using supports the software of the newly created blockchain with the fork, you have two digital currencies at the same time: Bitcoin and the Newborn.. In this article, we will go over Bitcoin Cash (BCH) instead of saying “Newborn”. When the Bitcoin Cash network broke away from the original network, Bitcoin holders received Bitcoin Cash equivalent to their holdings.. This is because, as mentioned above, the Bitcoin Cash blockchain is exactly the same as the Bitcoin blockchain until the fork occurs.. If you had 10 Bitcoins before the breakup, you have both 10 BTC and 10 BCH after the breakup.
The tail of the calf is breaking off here too. Individuals or organizations that own too many, too many Bitcoins are using the fork as an opportunity to profit as much as possible from the Bitcoin network and the nascent network.
Preparing to Fork
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Let’s have a big investor named Hakan. Let Hakan have 35,000 Bitcoins, each at $5,000. Hakan’s Bitcoins are worth $175,000,000. Like everyone who has a lot of money in the market, Hakan follows the news in the market and checks whether there is a development that may affect his assets.. Hakan learns one day that there will be a hard fork in Bitcoin and a new token will be created as a result of this fork.. We call this token Bitcoin Cash.
Luckily, Hakan is learning again that the Bitcoin wallet he uses will support the new Bitcoin Cash.. In other words, he will get as much Bitcoin Cash as the Bitcoin he has.. What does it mean? Hakan had 35,000 Bitcoins and will now have both 35,000 Bitcoin and 35,000 Bitcoin Cash. If Hakan goes out and buys millions of dollars worth of Bitcoin, he’ll have more Bitcoins than he had before.
Now we said $175 million or so.. So as you can see, our Hakan is a very rich person.. Rich enough to influence the market alone. Hakan says, “Let me buy more Bitcoin, when I buy that big amount of Bitcoin, the price will increase, and when my Bitcoin count increases, I will get more Bitcoin Cash”. Bravo Hakan.
Having this thought in mind, Hakan goes and buys another 15,000 Bitcoins, increasing the total number of Bitcoins to 50,000.. It does this one day before the full fork will happen.. If Hakan had not done this, he would have had 35,000 Bitcoin Cash when the fork took place, but that’s not the case anymore.. Because now Hakan will have 50,000 Bitcoin Cash.
What Happens When It Forks?
When there is a fork in the Bitcoin network, some of the value of the original Bitcoin network can be transferred to the nascent blockchain.. When Bitcoin Cash was created, the price of Bitcoin fell from $2,800 to $2,700.
As a result of the fork, Bitcoin Cash was created and was on sale at $555 at the time.
What Happened to Our Hakan?
When the price of Bitcoin fell from $2,800 to $2,700, Hakan’s Bitcoins totaled $140 million (we got the price from $2,800) to 135,000,000 fell to $. Our Hakan lost $5 million so. But Hakan foresaw it.. Hakan was smart. Since the fork took place, Hakan now had 50,000 Bitcoin Cash at $555 each.. Since Bizim Hakan has no intention of taking Bitcoin Cash to the grave, the exchanges decide to sell their Bitcoin Cash as soon as they become available for BCH.
Hakan sells 50,000 Bitcoin Cash and gets $27,750,000. Very clean, rosy made a profit of $28 million Hakan. If we subtract the $5 million loss caused by the fall in Bitcoin’s price, Hakan earned a total profit of $23 million.
We’re only going through Hakan, but let’s also mention that. There are other investors like Hakan in the market.. These other investors may be using a strategy similar to Hakan’s.. Buy a lot of Bitcoin, wait for the new blockchain to be formed, buy the newly created token in equal amount to your Bitcoin, sell as soon as you buy, thus reducing the amount of Bitcoin because it gained more value than necessary.
Here Hakan and similar people are called whales. These individuals have so many assets in the Bitcoin market that they alone shake the market thanks to the “buy” and “sell” orders they give.. Since all it takes to increase or decrease the price of Bitcoin is a few investors like Hakan, Bitcoin’s price may not reflect the real value of Bitcoin during the fork period.
Like Hakan. Investors know that the reason for the increase in the price of Bitcoin during the fork period is due to whales, so they reduce the amount of Bitcoin they have as soon as the hard fork is experienced.. Because they know that before the fork occurred, the whales bought Bitcoin and increased the price, the price of Bitcoin increased more than necessary and will decrease after the fork.
People like Hakan use this tactic a lot.. After the fork, they sell the amount of Bitcoin they want as much as they want.. Sometimes this amount can even see zero.. While the price of Bitcoin is in the decline phase, the price of Bitcoin can drop even when such large amounts of Bitcoin are disposed of.
As you can guess without even saying it, these people re-enter the market and buy Bitcoin when the price of Bitcoin drops.. In other words, they realize the simplest thing of investing: sell when high, buy low.
Our Hakan increased the amount of Bitcoin in his hand, bought an equal number of Bitcoin Cash, sold Bitcoin Cash after the fork took place, because the price of Bitcoin was too high. He also sold Bitcoin, waited for the price to drop, he bought Bitcoin again when the prices fell, with the purchase of large amounts of Bitcoin, the price of Bitcoin started to stabilize, then it started to increase and our Hakan made a profit again…
All written If you want the shortest summary of these things: Fork times are confusing, you have to be careful…
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