Bitcoin Forks Rally as Fees Increase on World’s Most Valuable Blockchain

Digital assets that stayed out of the limelight during crypto’s last bull cycle are waking up.

Bitcoin SV (BSV), the product of a 2018 hard fork of the Bitcoin Cash blockchain, has risen nearly 40% in the past 24 hours. The rally has pushed BSV’s market cap ahead of well-known DeFi tokens such as Curve Finance’s CRV and the recently launched SUI.

Bitcoin Cash, itself a 2017 fork of Bitcoin, is also up over 10%. The price action contrasts with low volatility in the overall crypto market – the two largest digital assets, BTC and ETH, have only moved 10 basis points on the day.

Alex Miller, CEO of Hiro, which develops tools for Bitcoin, doesn’t think there’s much more than speculation behind the price increases. “No one is really using Bitcoin Cash or BSV for anything,” he told The Defiant. “Something good is happening next door.”

Miller refers to Ordinals, a protocol for “writing” arbitrary data such as text and audio onto the Bitcoin blockchain, as the “good” development. First used to create “Bitcoin NFTs”, the protocol received an additional boost with the use of BRC-20 fungible tokens two months ago.

Hot money

In a crypto market full of traders thirsting for price action similar to 2021, which saw tokens like Solana’s SOL and Avalanche’s AVAX rise a hundredfold in price – any kind of success will attract copycats, both by developers looking to launch similar projects and investors who want to ride the wave.

BTC is up 66% on the year, ahead of ETH, which is up 52%, and the S&P 500, which is up 8%.

BSV, on the other hand, has barely surpassed the $41 mark it started the year at.

If Miller is right, speculators are betting that Bitcoin-adjacent projects like Bitcoin Cash and Bitcoin SV will see some spillover from the newfound attention on the world’s most valuable blockchain.

It’s not entirely true that people aren’t using Bitcoin Cash and Bitcoin SV more than usual — BitInfoCharts shows uncharacteristic transaction peaks for both blockchains this year. Bitcoin SV actually hit an all-time high of over 50 million transactions in March.

Alongside the price action of Bitcoin Cash and Bitcoin SV are rising prices of other tokens that were hot during the mania of 2017. Ethereum Classic, which broke away from Ethereum in 2016, has risen nearly 3% in the past 24 hours, and Litecoin, which has a similar design to Bitcoin, is up over 3.5%.

Unconfirmed transactions at ATH

It’s unclear why some of the old guard are having their day in the sun, but it’s clear that the Bitcoin blockchain is seeing demand only ever seen at the height of the bull markets – the number of unconfirmed transactions is at an all-time high as of May 8, thanks to increased demand from Ordinals and BRC-20s.

“A lot of people are competing for blockspace,” Miller said. He believes the requirement to trade in Bitcoin will cause short-term difficulties for users as transaction fees have increased and others are waiting for processing.

“For people trying to use it for financial transactions today, it’s not the best,” he said.

In the longer term, Miller believes that the increased demand will lead to the conclusion that Bitcoin will need to develop scaling technologies such as Layer 2s that have attracted significant investment and users to the Ethereum ecosystem.