The Bitcoin Hard Fork

So Bitcoin (BTC) dominance of the cryptocurrency markets is back up over 50% after recently being as low as 40%. This means that today the market cap of Bitcoin is about half of the market cap of all cryptocurrencies put together.

I believe this run-up has been caused by people who want to receive Bitcoin Cash (BCC) after the the presumed fork tomorrow morning. If that's right then I would expect the price of BTC to take a significant hit tomorrow. In a simple static model one would expect the price of BTC+BCC tomorrow to be the price of BTC today. But don't expect a static model to hold.

When a stock splits it's common for the market cap of the stock to immediately go up, even though the split itself doesn't produce much or any apparent value.

On the other hand I think a lot, at least in the short term, rides on how the mainstream media covers this fork. It's possible it will be seen as a major weakness in Bitcoin and cryptocurrency in general, because it's hard for the uninitiated to understand. Heck, it's hard for the initiated to know where things are going. So, Bitcoin could take a significant hit due to lack of confidence and that would tend to hurt confidence in the market as a whole.

Another reason the price of Bitcoin is likely to take a hit: It seems that people have recently been trading lots of alt-coins for bitcoins in order to receive the Bitcoin Cash at the time of the fork. Once they have their Bitcoin Cash in hand, many will presumably be trading bitcoins back to restore their former positions in alt-coins.

Where will Bitcoin Cash (BCC) be tomorrow? The futures price of it now is near $300, compared with Bitcoin's $2800. I have no strong opinion of where it will end up. The biggest fork we've seen so far was between Ethereum and Ethereum Classic and, if Bitcoin Cash does as well relative to Bitcoin as Ethereum Classic did relative to Ethereum, then Bitcoin Cash will probably quickly be the 4th most valuable crypto currency. I said "if"...

A fork tomorrow will certainly a big day in Bitcoin history. There have been important forks in the past, but there has never been a contentious fork of this magnitude.