• Bitcoin Thanksgiving rally loses steam but consolidates near USD 7,400
  • Fundstrat’s Lee still insists weakened market can only look up approaching 2020
  • Bitcoin software improvements continue to ensure scalability and decentralization

The bulls’ enjoyment after Thanksgiving was cut abruptly short on Sunday today, even after more than 24 hours had passed since Bitcoin crossed the USD 7,700 threshold yesterday. Alas, things started to wind down in Shanghai trading at around 1:00 am UTC, when a slip to USD 7,400 turned into a fall to USD 7,238 (CoinDesk).

Price has recovered and edged higher to around USD 7,400 again right now at 2:30 pm UTC, but with Asian markets looming in less than 12 hours, it could be another day of profit-taking tomorrow unless North America steadies the Bitcoin market over the remainder of Sunday.

Most analysts aren’t perturbed by the signs in the short term, though, as displayed by the likes of Fundstrat Global Advisors analyst Tom Lee telling CNBC that the crypto “bloodbath” was only a blip in the big picture. For him the current weakness in the crypto markets was merely a reaction to the news in regulatory circles, especially in the US where crypto adoption hasn’t been as positive as people had expected, implying the unexpectedly slow start to Bakkt futures as a triggering cause.

He dismisses these headwinds, insisting that even a 50% decline from the year’s high has not budged him from his outlook over the longer term for Bitcoin. He said:

“There’s a lot of reasons to be more optimistic about crypto next year.”

He continues by saying that American equities are the prime motivator for this, as US stocks now peak at all-time highs, ensuring that risk-tolerant investors are motivated to add even more capital to markets perceived as riskier, Bitcoin being one of them, traditionally speaking anyway. As we pointed out in past analyses as well, Tom notes how Bitcoin’s best-performing periods have a strong correlation with a boom in top American indices.

Put that into the mix along with the upcoming block reward halving scheduled for May 2020, and we are looking at renewed Bitcoin boosts. And if that’s not enough, Lee even says that the messages coming out of China are going to end up patting crypto on the back, even if only subtly. He explains:

“…its message is pro-digital assets and blockchain and underlying that is cryptocurrency.”

Meanwhile, some social media commentators have been sharing the latest data from BitMEX that suggests that software improvements in the Bitcoin network have ensured continued scalability and propagated decentralization.

According to BitMex Research, a measurement of the Initial Block Download (IBD) times of Bitcoin Core software releases from 2012 to 2019 had proven that older versions of Bitcoin Core would not have been able to synchronize today, showing how important it was that scalability improvements over the years were absolutely critical to the network. The blog post published stated:

“Older versions of Bitcoin struggled to get past the pickup in transaction volume which occurred in the 2015 to 2016 period. Therefore we conclude that without the software enhancements, an initial synchronization today could be almost impossible.”

The data shows that in the first three years, beginning from Bitcoin Core versions 0.8.6 to 0.10.0, it would have taken a total of over 3 days for the entire block to get downloaded and sync with the network. This has steadily decreased since 2014, when version 0.11.2 took the total duration down to 2 days. Version 0.12.0 until the latest version published just last week (0.19.0.1) have all required less than 24 hours to download the entire blockchain and sync.

One thing they did notice though was that as the Bitcoin network continued to grow in size, scalability improvements do not seem to be able to catch up, leading to the research team to conclude that:

“The data also shows that technological innovation is unlikely to keep up with the growing blockchain going forward and that IBD times will increase.”

The main scaling upgrade that has made blocks much more efficient in storing data has been Segregated Witness (SegWit) which allowed for a relatively low four-megabyte block weight limit to maintain the relatively high block time of 10 minutes.

As of today, the entire Bitcoin blockchain needs about 293 GB of space, with every block taking up just a little over 1 MB. Bitnodes shows that the entire planet has some 9,500 reachable nodes.

 

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