Bitcoin price drops below $1,000 as software debate rattles market

The price of a single bitcoin tumbled below $1,000 on Friday for the first time in nearly a week as a debate over a controversial software update threatens to split the network.

One bitcoin BTCUSD, -2.01% went for $969 on Friday, according to the CoinDesk Bitcoin Price Index, a popular gauge of the currency’s value that incorporates pricing data from several of the world’s largest digital-currency exchanges. That is its weakest level since March 18.

The $1,000 level has a special significance for bitcoin traders, said Chris Dannen, a founding partner at Iterative Instinct, a small New York-based private-equity fund that trades crypto-assets.

“There is a strange attraction that the market has to keeping bitcoin at $1,000,” Dannen said.

The world’s largest cryptocurrency by market capitalization has been rattled by a debate over how best to ameliorate the strain on the network caused by rising transaction volume, said Charles Hayter, chief executive officer of CryptoCompare, a company that provides data and analytics about the cryptocurrency market.

A proposed software update that, if approved, would increase the capacity of each “block” in the bitcoin blockchain, allowing the network to process transactions more efficiently. That proposal came dangerously close to achieving the required 75% threshold of support in the bitcoin mining community.

Miners are rewarded with new bitcoins for providing the computing power necessary to process transactions.

Support for the update appears to have receded in recent days. but the debate is far from settled.

Also, the People’s Bank of China has once again moved to tighten oversight of its exchanges, reviving fears that the central bank is looking to crack down on bitcoin trading more broadly. Earlier this week, Huobi, one of the “big three” Chinese bitcoin exchanges, said it would require customers to provide details about the origins of their money, as well as its destination. But it later clarified that these restrictions would only apply to users who have been flagged for anti-money-laundering risks.


Source: http://www.marketwatch.com/story/bitcoin-price-drops-below-1000-as-software-debate-rattles-market-2017-03-24

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