On July 28, Bitcoin analyst and researcher Tuur Demeester revealed that Bitcoin dominance index recovered beyond its 50 percent mark for the first time since May.
Although the market cap of the entire cryptocurrency market fell from around $115 bln to $89 bln, the dominance of Bitcoin over the market has increased, as Bitcoin moved closer to a market cap of $46 bln.
As a result, Bitcoin price has moved closer to the $2,800 mark, mostly due to the optimism surrounding the activation of the Bitcoin Core development team’s transaction malleability fix and scaling solution Segregated Witness (SegWit).
#bitcoin price nears $2,800 as bitcoin market cap breaks 50% dominance index. Factors: SegWit, demand from inst. investors & traders. pic.twitter.com/akWb0OyfK3— Joseph Young (@iamjosephyoung) July 28, 2017
Aug. 1 chain split is likely but why is market confident in Bitcoin?
Some of the Bitcoin industry’s largest Bitcoin exchanges and trading platforms including Coinbase, Bitfinex and Bitstamp have already clarified their stance on Bitcoin Cash, the hard fork proposal being developed by ViaBTC.
Initially, Bitmain developed Bitcoin ABC as a contingency plan towards BIP 148, user-activated soft fork. But, as the mining community came to a consensus to activate SegWit via BIP 141, the original SegWit proposal, the probability of the activation of Bitcoin ABC or Bitcoin Cash, significantly decreased.
Still, ViaBTC officially announced earlier this week that it plans on pursuing the Bitcoin Cash hard fork, to create a separate version of the original Bitcoin Blockchain. The abrupt announcement of ViaBTC came as a surprise to Bitmain as well, which led the company to release yet another announcement clarifying that Bitcoin ABC was merely a contingency plan against BIP 148.
Despite the rejection of Bitcoin Cash by exchanges, mining pools and businesses, its creation and introduction to the market will mean a chain split. Prior to the finalization of SegWit activation, the market remained unstable due to the possibility of a hard fork execution and now, the market is more confident in Bitcoin than ever before.
For the most part, that is because Bitcoin has proven its ability to scale through the finalization of SegWit and the vast majority of the industry has announced that they don’t intend to acknowledge Bitcoin Cash as a legitimate fork of Bitcoin. Rather, leading businesses such as Coinbase and GDAX will consider Bitcoin Cash as an alternative cryptocurrency or altcoin.
Hence, due to the finalization of SegWit and the clarification of the Bitcoin industry on the Bitcoin Cash hard fork, the market and investors have regained confidence in Bitcoin. Additionally, according to analysts from Goldman Sachs and other leading financial institutions, Bitcoin’s upward momentum will likely be sustained.