Though the scaling debate remains in progress, bitcoin enjoyed both price stability and high trading volume in the seven days through 12:00 UTC on 11th March. Market participants traded more than 35m BTC during the seven days through 1:30 p.m. (EST), Bitcoinity figures reveal.
These trends were similar to the prior week, when bitcoin prices fell less than 1% and market participants traded more than 28m BTC.
Elsewhere, bitcoin prices crept higher between 12:00 UTC on 4th March and 12:00 UTC on 11th March, rising from $419.60 to $420.86, according to the CoinDesk USD Bitcoin Price Index (BPI). This represented a 0.2% gain.
The digital currency did experience some volatility during the week, however, as the community continued to debate whether the network was facing capacity issues.
Data from Statoshi.info shows that many data blocks this week were full to capacity with transactions, a move that industry businesses have asserted is the cause of customer complaints.
Perhaps accordingly, the currency plunged to $393.18 by 16:00 (UTC) on 5th March, a 7% decline from 12:00 UTC on 4th March, but recovered quickly, rising to $408.90 at 15:00 UTC on 6th March. Bitcoin then broke above $410 at 11:00 UTC on 7th March, hitting $414.39 by 03:00 UTC by 8th March.
For the rest of the week, the digital currency’s price mostly fluctuated between $410 and $420.
While differing camps have proposed more than one way to solve the scaling debate, the bitcoin community has yet to embrace any particular solution. Currently, blocks can hold up to 1 MB worth of transactions, and more than one solution has been proposed to increase capacity.
This is a key issue for traders, as the perception that high fees are needed to transactions, the thinking goes, could perhaps discourage new buyers or users.
Whether the fees are ‘high’ or enough to discourage users remains debatable, but some traders believe that negativity toward capacity issues is being balanced out by other forces.
For example, the amount of rewards paid out by the bitcoin network is expected to halve in July, reducing the seignorage miners receive for 25 BTC to 12.5 BTC. Arthur Hayes, co-founder and CEO of digital currency exchange BitMEX, spoke to this situation in his latest newsletter.
He further outlined the uncertainty over the scaling issue, showing how the network would operate differently depending on how or whether it is addressed.
“Some speculate that the saving grace for miners is higher transaction fee income,” said Hayes. “That means either much higher fees due to network congestion (no block size increase), or lower fees but on a higher number of transactions on a network that can support more transactions (block size increase).”
Hayes notably doesn’t see the issue being addressed before the July reward halving, at which point some industry observers believe the price of bitcoin could increase as the rate of new coin creation is reduced.
“Either way, battle lines have been drawn and it doesn’t appear a solution will present itself before the July halving,” Hayes wrote.
Still, others believe there is still optimism for an eventual solution, and that this is positively impacting price.
Tim Enneking, chairman of Crypto Currency Fund, a digital currency-focused hedge fund, asserted that “the miners, exchanges and traders believe the hard fork matter will eventually be decided.”
“There are two competing schools, and they are both releasing code,” he said, adding:
“There is enough uncertainty to keep the price down, and there is enough confidence to keep it up, so it’s moving sideways.”
Sideways candles image via Shutterstock