Tuur Demeester, prominent bitcoin analyst and investor, recently stated that bitcoin price is leading its fourth attempt to surpass the $4,500 mark to establish its new all-time high.
Unfortunately for investors and traders, bitcoin price experienced a minor correction earlier today on August 28, struggling to test its attempt to rise past $4,500 and sustain its upward momentum in the short-term.
An optimistic indicator of bitcoin’s short-term trend has been its stable daily trading volume, which has been above $1.6 billion straight for the past four straight. Prior to that, when bitcoin price was nearing $4,500, the daily trading volume of bitcoin reached nearly $4 billion, as the daily trading volume of the entire cryptocurrency market surged past the $6 billion mark.
Although it is difficult to justify bitcoin’s struggle to overcome its correction and surge past $4,500, many analysts believe it can be attributed to the congestion of the bitcoin network. Between the Bitcoin Cash mining instability and the lack of SegWit-enabled transactions, the bitcoin network has been failing to clear its mempool of transactions at a sufficient rate.
As the Bitcoin Core development team’s scaling and transaction malleability solution Segregated Witness (SegWit) becomes more widely integrated, the number of SegWit-transactions will increase as a result. As wallet platforms implement the functionality, bitcoin fees will also decrease for users dealing with SegWit transactions. However, for users sending and receiving normal transactions, fees will likely be high until the next difficulty adjustment.
The bitcoin network has already improved in terms of network congestion in the past week, as the size of the mempool decreased from over 103 million bytes to 61 million bytes, a 40% improvement. Many transactions that have been stuck in the mempool without any confirmations from miners were cleared, returning stability to the network.
Once bitcoin transaction fees start decreasing at a fast pace due to a decrease in Bitcoin Cash mining profitability, larger adoption of SegWit by service providers and increased number of SegWit transactions, it is likely that bitcoin could test the $4,500 region and sustain its upward trend until $5,000.
Jihan Wu, the co-founder of Bitmain, operating company of the largest bitcoin mining pool in Antpool, also announced earlier this week that the company is working on fixing bitcoin and Bitcoin Cash mining errors:
“BCC/BTC mining together caused lots of error in the mining pools and empty block is a fall back security measure. It is solved now,” said Wu.
Mining of full blocks by Antpool and other large mining operators will also allow the bitcoin mempool to clear at a faster rate and allow bitcoin transaction fees to decrease. The bitcoin network needs stability in terms of mining and transactions due to its heavy congestion that has left tens of thousands of transactions unconfirmed for days in the past week.
Improvement in scalability caused by SegWit, decrease in transaction fees and stabilization of the bitcoin network will lead to a rise bitcoin price, in the short-term.