Saying that the cryptocurrency market has been on fire in 2017 would be the understatement of the year.
Since the year kicked off, bitcoin — the flagship crypto coin — has gained 242%.
And ethereum, the world’s second most valuable cryptocurrency, boasts a year-to-date gain of more than 3,600%.
By comparison, the S&P 500 has posted a mere 10%.
Heck, the NASDAQ Composite Index — which includes all five “FAANG” stocks — is up just 18% on the year.
In other words, if you’re after the biggest gains in the market… forget stocks.
Cryptocurrencies are where you need to be.
In fact, I’m tracking literally hundreds of tiny cryptocurrencies trading for less than a buck.
And whenever bitcoin moves higher, these penny cryptocurrencies erupt to the tune of 500%, 1,000%… even 10,000% when the stars align perfectly.
I call such eruptions “Crypto-Quakes.”
And with 11 brand-new cryptocurrencies about to launch, one newbie is poised for a massive “quake” on Aug. 31.
In the meantime, senior analyst Jonathan Rodriguez, who tracks cryptos closely, has uncovered one of the market’s most undervalued opportunities…
Ahead of the tape,
Stick a Fork in It
In case you missed it, bitcoin underwent a major change a few weeks ago.
You see, thanks to surging popularity, bitcoin was plagued by sluggish transaction processing.
To give you some context of just how slow bitcoin processing is, Visa can process 2,000 transactions per second on average. But only three transactions can be saved to a bitcoin block per second, according to cryptocurrency expert Zaki Manian.
And at present, only one megabyte of bitcoin transactions can be mined at one time, to prevent denial-of-service attacks on the network.
In order to scale up, its developers decided to make an upgrade to the currency.
But digging into the upgrade requires a bit of background knowledge…
15-Second Crypto Review
As you know, cryptocurrency at its core is a digital money facilitated by a software network.
And that software is kept current through updates issued by a cryptocurrency’s developers.
Generally speaking, the majority of these software updates are benign.
However, when developers of a cryptocurrency make changes to the software that causes incompatibility between pre-update coins and post-update coins — it creates what we call a fork.
Essentially, one cryptocurrency is split into two but on the same software network.
And that’s exactly what developers just did.
They split the currency into two, giving birth to bitcoin Cash.
In the case of bitcoin, for each token a person owns, they received a single bitcoin Cash token.
If you’re familiar with the stock market, think of the fork as a stock spinoff, where a company hands owners of its stock shares of a new company that it’s just divested.
The Best of Both Worlds
So why fork the currency instead of merely updating it?
Well, sometimes the functionality of a coin just can’t be solved with a minor update. In other cases, it might be a fundamental disagreement about how a currency is operated — or, rather, governed.
The bitcoin fork was simply the result of an irreconcilable rift between users.
As I mentioned earlier, bitcoin has become so popular transactions are taking much longer to process than ever before.
But some bitcoin owners felt that making a change to the transaction limit opened the cryptocurrency up to fraud.
So in an effort to scale bitcoin and alleviate bottlenecks, they increased the transaction limit to eight megabytes from one in the newly created bitcoin Cash.
bitcoin purists can continue using the unchanged bitcoin, and users that crave faster transactions can use bitcoin Cash.
In other words, each currency offers something for everybody in the bitcoin universe.
How Trade a Fork Like a Pro
Here’s the thing about forks…
They’re not inherently a bad thing.
In fact, just after a fork, there’s an opportunity to capitalize on price inefficiencies.
The new currency usually trades at a fraction of the value of the original currency, and at far less volume. After all, its value is derived from the number of people trading and using it.
While it’s not as valuable as bitcoin, bitcoin Cash launched as the fourth-most-valuable cryptocurrency in the world.
You may also see a sharp sell-off in the parent currency, too.
But just like stock trading… if there’s no change in the fundamentals of either currency, buying during a post-fork dip could prove incredibly profitable.
For instance, Bitcoin Cash fell 50% in the week following its launch but rose 50% in just two days off its August low.
Bottom line: By scooping up a forked token during a post-split sell-off, investors can potentially cash in on a big snapback move to the upside. So watch out for upcoming forks closely and be ready to strike.
On the hunt,