Bitcoin dives below $7,000

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Bitcoin has
been on a wild ride since a plan to help the red-hot coin scale
was scraped. 

Backers of the so-called Segwit2x proposal were considering to
split from bitcoin’s main blockchain network, but power-brokers
behind the plan called off their
support for the upgrade on Wednesday. That means the
network will remain intact — at least for now.

Initially, the news sent bitcoin up near $7,900
per coin.  Since then, however, it has tanked by
nearly $1,100. On Friday morning bitcoin fell below
$7,000, sliding to a low of $6,707.

It was trading down 4.47% at $6,812 at 10:23 AM EST,
according to data from Markets Insider. 

Segwit2x would have increased the size of
the 

blocks underpinning the bitcoin blockchain
network, which would have enabled it to potentially process more
transactions. Backers thought the plan would help the digital
currency scale faster.

Many bitcoin enthusiasts and traders viewed the
cancellation of Segwit2x as positive, because it might keep the
network intact.

“When 2x was called off, it became immediately clear
there’s greater consensus for a single bitcoin blockchain and
therefore there is greater value retained in the bitcoin
ecosystem,” Ned Scott, CEO of Steemit, wrote in a statement to
Business Insider after news of the cancellation. “The case was
made by the immediate price increase when 2x was called
off.”

But on Friday, traders poured into bitcoin cash, a clone
coin of bitcoin that has the potential to process much more
transactions than both bitcoin and a potential Segwit2x
coin. 

Bitcoin cash was trading at a record high, up more
than 30% against the dollar near $890 Friday
morning. 

Such volatility is commonplace in cryptocurrencies, a wild
west ecosystem that lacks a matured trading
infrastructure.

That may change, however, with the development of
bitcoin-linked products such as futures and exchange-traded
funds. Two exchange giants have said they were preparing to
launch bitcoin futures in the short term, and an ETF is viewed a
likely followup to such a product. 
Here’s Bank of
America Merril Lynch in a note out to clients on the subject:

“We would not overstate this, as a material reduction in
volatility would require there to be a large community of
speculators prepared to provide liquidity to the natural owners
of the various coins, but given the volatility of the coin
markets, maybe there already exists a cadre of participants who
would look to short coins on strong days and vice versa, which
could overall reduce volatility.”

Get the latest Bitcoin price here.>>

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