What BIP-110 is and why it splits the community
A BIP, or Bitcoin Improvement Proposal, is a change to the Bitcoin protocol written by software developers. The usual path: a developer proposes it, then miners signal whether they back it. The bar is high, normally around 95% miner support. Even 95% signaling does not guarantee adoption. Real change needs broad network consensus, which includes participants beyond miners, such as exchanges and other users of the blockchain.
BIP-110 aims to restrict some uses of the Bitcoin blockchain. The trigger is ordinals and runes. These let people launch meme coins on Bitcoin and create inscriptions on individual coins. Think of it like a collector's edition: if a certain block matters to you, you could mark a Satoshi mined at that block. This adds a collector angle to single Bitcoins and to the Satoshis they split into. Critics say this fills block space with spam. Defenders do not necessarily like ordinals and runes, but they disagree that the blockchain should be changed to block them.
A core fight here is the approval bar. BIP-110 needs only 55% miner signaling, far below the usual 95%. Very few BIPs have ever made it into the protocol, which is why broad consensus normally matters so much.
The August 7 risk
This is flagged as a possible source of Bitcoin volatility in early August. It is not the kind of event that causes a hard fork. Hard forks split the protocol into separate coins, like Bitcoin Cash or Bitcoin SV. BIP-110 would instead create a one-year soft fork that filters these transactions out of approval.
The danger: if some parts of the network accept it while others reject it, different areas would treat transactions differently and that could bring short, temporary volatility. Right now less than 1% of miners signal support, so it looks unlikely to pass and unlikely to affect the blockchain. Still, even when miners reject something, individual nodes or users can choose to adopt it. The probability is low, but it is worth watching around August 7, when it goes live.
Could this create meaningful volatility for crypto markets in the near term? No. The debate is specific to Bitcoin and should not touch other cryptocurrencies. It sits so far outside the view of mainstream investors that most will never know it happened. At most it could cause a small pocket of volatility if some parts of the network enact it and others do not on the go-live date. The likely outcome: no adoption, no protocol change, and you never hear about it again. Tracking it is simply part of staying aware of every possible risk.
The chart: $60,000 as the key floor
Bitcoin's momentum has slowed this year. The level to watch is $60,000, where the price more or less bottomed in February. It briefly traded down to $57,000 intraday recently, but $60,000 has largely held.
Why that number matters: back in early October, when the network hit its peak hash rate, $60,000 was the cost of production for the best miners running the most efficient equipment. In past sell-offs, the top miners' cost of production has marked the support level for the final bear market trough.
On moving averages, Bitcoin recently broke above its 50-day. Ether made an even bigger move. Watch for possible resistance at the 100-day and 200-day moving averages.
Cost-basis levels above the market
Near $80,000 sits the cost basis for most investors. The ETFs have a cost basis around $83,000. A few months ago the price rose to that zone, which happened to line up with the 200-day moving average, and it acted as firm resistance.
The active investor cost basis, meaning the average price paid by people who bought Bitcoin in secondary markets, was 68,000 several months ago and has since fallen to 66,000. A falling active cost basis shows that digital natives have been buying at these lower prices, confirmed by some very large inflows from that side. Activity on the spot ETF side has been quieter.
The Clarity Act is the bigger catalyst
The main thing to watch is the Clarity Act. Passage is still to be decided. A lot of bipartisan work has gone into it, and there is motivation on Capitol Hill to pass it, but time is short. If it does not pass before summer recess, by the time the Senate and Congress return it will be fall, then midterm season. The risk is that a delay pushes it to maybe next year. If the makeup of Congress changes, priorities could shift too.
Crypto has bipartisan support, so it likely passes at some point. If it were to pass in the short term, that could give Bitcoin a jolt of upside momentum from current levels. Any upside would need to hold longer than the moves seen over recent weeks and months.
