Wednesday brought a decline for Bitcoin, sending it toward $84,000 after reaching a seven-month high near $87,250 earlier in the week. The two forks that are among its oldest are both on the rise once more.
This week, Bitcoin Cash saw its price rise by as much as 30%, following news that CME Group plans to introduce BCH and Uniswap futures on Oct. 19. Bitcoin SV, which came from a split of Bitcoin Cash led by 2018’s “Hash War,” also climbed sharply in tandem, adding about 20% and reaching an annual peak close to $21.
Forks and Their Split
A split in August 2017 produced Bitcoin Cash, which departed from Bitcoin’s main chain because of disagreement about block size. The fork was built with cheaper, faster payments in mind, not as a pure store-of-value tool.
A little over a year after Bitcoin Cash itself was born, it fractured again in what came to be called the “Hash War.” One group, led by Craig Wright, wanted far larger blocks and a return to Bitcoin’s original design.
Since then, both networks have traded well below Bitcoin’s price and volume. They sometimes move together sharply when a new reason to trade appears.
CME’s Announcement
CME Group was the driving force behind the market’s move this week. The exchange announced on Monday that it plans to introduce Bitcoin Cash futures on Oct. 19, subject to regulatory approval.
BCH becomes the exchange’s tenth single-asset crypto contract with this move, while Uniswap joins as the eleventh.
Standard contracts will represent 250 BCH, with micro versions covering 25 BCH for smaller traders. CME’s global head of cryptocurrency products, Giovanni Vicioso, said the contracts give institutions “broader, regulated tools to navigate evolving digital asset related price risk.”
Bitcoin Cash jumped as much as 30% in the hours after the news. It tore through $340 and briefly touched $358 before cooling into Wednesday’s session.
The Grayscale Bitcoin Cash Trust has applied to change its form so it can be listed as a spot ETF on NYSE Arca. That move added an institutional-adoption angle to the case for BCH, sitting alongside the futures push. The result was a brief run that pushed BCH’s weekly gain above 50%.
BCH and BSV both rose on the same current. Bitcoin SV, trading as BSV, climbed roughly 20%, in line with BCH, before pushing higher toward $21, an annual high.
The rise in open interest on BSV derivatives tracked the climb in price, with traders opening new positions instead of simply closing existing ones.
What Happens Next
Short, sharp bursts are how forks usually outpace the original coin, though they typically give their gains back quickly. The smaller a fork’s market capitalization, the more easily prices can be affected and the more volatility rises.
Tuesday saw Spot Bitcoin ETFs draw in $715 million, which marked a solid inflow day despite the coin’s price remaining largely unchanged.
The review by CME’s Bitcoin Cash and Uniswap contracts is set to begin trading Oct. 19, pending the exchange’s regulatory approval. That examination centers on its rules for trading, with a particular focus on the market-making obligations of firms operating on its platform.
The Institutional Pitch
The announcement from CME alters the math for institutional investors who hold Bitcoin Cash, because it creates a regulated market where they can hedge their exposure.
Grayscale’s ETF filing brings a narrative about institutional adoption to the table. The two announcements combined produced a surge that pushed both forks upward.
The Pattern Lives On
This week, two forks are giving back ground after a surge in attention. Bitcoin Cash and Bitcoin SV are both following the same pattern: they rose sharply in visibility, then retreated.
“Broader, regulated tools to navigate evolving digital asset related price risk.”
That is the pitch for the futures.
Again the forks are being thrown into the air. Their continued rise rests upon the pending regulatory examination yet to be completed.
Source material: “Bitcoin Dips, But Its Forks Are Flying Again,” Decrypt.
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