SegWit2x is essentially a compromise between two main competing camps. One proposed a direct approach, seeking to increase the block size. The other, a group of developers known collectively as Core, pushed for a long-term solution by moving some data outside of the main network, a scheme called SegWit that had been resisted by miners because it also could diminish their influence. In the end, the miners agreed to adopt SegWit, but also increase the block size to 2 megabytes.

The upgrade isn’t final. The BIP91 lock-in has a grace period of about two days, during which miners will prepare to activate the software. It will then take about two weeks for SegWit to be fully adopted. Developers still warn about potential hacker attacks that could disrupt the process.

Then, three months from now, the community will face another challenge when some of the world’s biggest miners move to adopt the second phase of the proposal, the doubling of the block size. Still, many in the community agrees that the hard part is over, with prices seen stabilizing and strengthening.

“We do believe it will continue, now that we’ve gotten over this hump,” said Ryan Rabaglia, head trader at digital-trading company Octagon Strategy in Hong Kong.

Eoin Treacy's view

For a globally traded asset the inability to ever mint more than 21 million coins seems like an arbitrarily tight constraint. Among the factors that represented medium-term challenges for bitcoin include the fact more than 16 million have already minted. The difficulty of minting each new coin becomes progressively more difficult so the supply issue was an inhibiting factor growth.

Alternative coins such as Ethereum already possess a built-in ability to expand supply in an orderly manner. All of these factors were putting pressure on the bitcoin community to react. Their response appears measured and looks like they will succeed in avoiding a hard fork event. 

The debate was, at its core, between the equivalent of monetary purists, opposed to anything that would tamper with the intrinsic value of the existing supply of coins, and those focused on promoting growth through expanding supply. Even under a gold standard new mining increases supply and in an unpredictable fashion. Gold rushes when new seams were discovered whether in South America, California, Australia or South Africa all contributed unexpectedly to supply and fomented inflation. Creating a system that allows supply to increase is in line with monetary purism provided the rate of supply is not arbitrarily influenced by governments seeking to inflate debt away. 

This log scale chart of bitcoin highlights the extent to which it has already rallied from modest beginnings and helps to illustrate why there has been such interest in the initial coin offerings. After-all, weight of money ensures it is much easier to double from $0.01 to $0.02 than from $1000 to $2000.   

Bitcoin surged more than 50% from its July 17th low to retest the $3000 level and a pause in this area is possible. Nevertheless, the short-term progression of lower rally highs has now been broken and suggests a return to demand dominance beyond short-term steadying. 

Ethereum which more than halved from its June 12th peak near $400 has been less explosive on the upside since the bitcoin decision potentially reduces Ethereum’s appeal. It has however broken its progression of lower rally highs and a sustained move below the July 16th low near $189 would be required to question that view.