Things may start to escalate dramatically
Not that they are not already, but we may likely have not yet seen the best part of the drama. Personally, I don't really think that there will be a split leading to a hard fork but if things do come to that after all, we will certainly see a merciless war with massive dumps of the other Bitcoin by both sides. So you may picture what the price would look like in these circumstances and to what insane levels volatility might spike in this case. Long term Bitcoin holders won't be happy, I'm not even speaking about merchants
Long term Bitcoin holders are used to insane levels of volatility, if anything it will shake out some of the weaker hands. Merchants don't care about volatility, as they usually instantly convert to Fiat. A merciless dump war is an interesting theory, but I assume people will flock to whatever chain solves the scaling problem most effectively.
Scaling, that's the one issue that neither Bitcoin nor any of the alts seem to have solved yet. Not even Ethereum, from the looks of it. If you know of any cryptocurrency that has solved this problem I'd love to hear it. Serious question. I've lost track of the cointless coins and tokens and most of them seem to focus either on anonymity, smart contracts or buzzwords
Litecoin has recently adopted SegWit and Lightning Network
Whether these improvements will actually help to solve the scaling issues in practice remains to be seen though. Right now, Litecoin hasn't yet run into this problem, so it is hard to say how it will scale up in real life. Regarding merchants, they may in fact not care but payment processors via which they receive payments certainly do. As well as users paying with bitcoins, for that matter. What I mean to say is that the receiving party (i.e. merchants and payment services) will have to increase their safety margins to avoid being caught by a sudden surge in volatility. That means that buyers will have to pay more in dollar terms if they choose to pay with bitcoins
