- Bitcoin prices bullish and ranging
- Proposal to slash block size to 300kb resuscitated
- Transactional volumes low but likely to expand as BTC demand pick up
Luke J is putting forth a bid to reduce block size from 1MB to 300kb. Without a doubt this will affect BTC prices should it make it as a BIP or as a pull request. Meanwhile, BTC prices are consolidating and could print higher if they race past $3,800.
Bitcoin Price Analysis
There is another twist to the Bitcoin Block size debate. A Bitcoin developer, Luke j, is writing code on the Bitcoin source code in a proposal seeking to further reduce block sizes from 1 MB to 300 Kb. As we know, the topic of block sizing is always contentious drawing criticism and praise in equal measure.
The last time we had a Bitcoin legacy hard fork was at the height of the previous ICO pumped rally when BTC prices were trading at around $8,000 apiece. Proponents of Segwit 2X saw it fit for block sizes to increase from 1MB to 2MB.
After their pitches flopped, Roger Ver and crew formed Bitcoin Cash with the endorsement from Wu Jihan who has since stepped down as the CEO and co-founder of Bitmain. Doubts abound. Critics think Luke’s proposals will quickly die.
1) Same timeframe as BIP148 (and frankly still too far off for comfort – we needed this yesterday)
2) No, there is no reason to prefer Segwit transactions. The bias we have now is breaking incentives / harmful.
3) Segwit was controversial too. That doesn't guarantee a split.
However, if there is consensus culminating to a block reduction from 1MB to 300kb, Lightning Network stands to be the primary beneficiary. In a worst-case scenario, transactions will migrate to other scalable platforms as Litecoin, and even Nano are certified fast, settling almost instantaneously. It is still a long way from being considered. Once his proposal evolves to a BIP or a pull request, that’s when it will start ruffling feathers.
At the moment though, BTC prices are steady and doing what it has been doing in the last three days or so—it is flat. However, the fact that it is trading within tight trade ranges and inside Feb 8 high low, is positive for traders and holders.
Before traders load up, it is super important for prices to edge past $3,800. The emphasis on $3,800 is clear. It is the 50 percent Fibonacci retracement line of Dec 2018 high low. Apart from that, the level marks the tops of the double bar bull reversal pattern of Jan 13-14.
Therefore, while there appears to be urgency, patience is the bottom line. Once our trading conditions are live, risk aggressive traders can aim at $4,500 and later $6,000.
Volumes are low as price action range. Like in our previous BTC/USD trade plan, any bar that reflects underlying demand should be at the back of high volumes first exceeding averages of 10k and most important 35k of Jan 30—which is above Feb 8’s 32k—according to data from BitFinex.