Bitcoin [BTC] prices dropped to a low of $3587 yesterday, only to regain poise and jump to $4135 levels. Contrary to my expectations, the virtual currency took out the falling channel hurdle.

Mining Bitcoin is more profitable



The chart above shows the “Daily Bitcoin Cash Profitability Against Original Chain”. It is quite clear that the incentive to mine Bitcoin Cash is less now than it was about 24 hours ago. Thus, miners are swinging back to Bitcoin from Bitcoin Cash [BCC] as currently it is 150% more profitable to mine BTC.

Focus on SegWit2x fork

We could be in for another split in Bitcoin in November. Segwit2x has widespread support among miners, but is being opposed by the Bitcoin core developers. Both parties claim that their version is “Bitcoin” and not the other. Furthermore, both parties are reluctant to implement replay protection… Something that would block the hacker from reusing/replaying the transaction details done on one blockchain on the other blockchain.

If both parties fail to reach consensus, we could see another split in November. The renewed concerns of the fork may limit the upside in the virtual currency, although going strictly by the technical rules; the tables have turned again in favor of the bulls.

Technicals

Daily chart

Yesterday’s candle carried long lower shadow, which highlights fresh demand on the dips. A bullish follow through today would open doors for record highs.

1-hour chart - shows a bullish break of the falling channel pattern. Exhaustion is seen near $4135 levels.

4-hour chart - Watch out for potential head and shoulders pattern

A bigger head and shoulders could be in the making… prices could resume its journey down to the neckline support of $3500, if the prices re-enter the falling channel seen on the 1-hour chart. Interestingly, the rising trend line support on the daily chart is also seen around $3500 levels.

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