Bitcoin Cash (BCH), the digital currency that powers the peer-to-peer payment network Bitcoin Cash, is currently experiencing a surge in market volatility. This heightened volatility has left BCH vulnerable to potential significant price fluctuations, making its near-term trajectory uncertain. As of the latest update, BCH/USDT is trading at $347, with its price showing little movement within a tight range over the past week.
We deep dive into BCH price action to project what to expect from the cryptocurrency that was once valued at over $2000.
Bitcoin Cash Navigates Rising Volatility
A key indicator of BCH’s increased volatility is the behavior of its Bollinger Bands (BB), a technical analysis tool used to measure market volatility and potential price extremes. Currently, there is a noticeable widening of the gap between the upper and lower bands.
Bollinger Bands work by plotting an asset’s price movements within a certain range, with the upper band representing the peak of price activity and the lower band representing the trough. A widening gap between these bands typically signals an increase in market volatility, often following a significant price movement.
For BCH, this increase in volatility began after the broader market downturn on August 5, which saw BCH’s price drop to a seven-month low of $309.90. Additionally, BCH’s Bollinger Bandwidth—a metric that traders use to assess market volatility and potential breakout scenarios—has surged since August 5. Currently, the Bollinger Bandwidth for BCH stands at 42.08, marking a 32% increase over the last seven days. An elevated Bollinger Bandwidth indicates that the bands are further apart, reinforcing the notion of high market volatility.
BCH Price Forecast
Recent analysis reveals that a Death Cross pattern emerged on BCH’s daily chart several weeks ago, which could signal a downward trend for the cryptocurrency. A Death Cross occurs when an asset’s short-term moving average (typically the 50-day moving average) crosses below its long-term moving average (typically the 200-day moving average). This crossover is generally interpreted as a bearish signal, indicating potential further declines in the asset’s value.
Adding to the bearish outlook, BCH’s Parabolic Stop and Reverse (SAR) indicator, which helps to identify trend reversals, currently shows its dots positioned above BCH’s price. When the SAR dots appear above the price, it signals a downward trend, suggesting that selling pressure could be increasing.
Should this selling pressure continue, BCH price may break below its recent low of $309.90, potentially falling to around $272.70. On the other hand, if market conditions improve and bullish sentiment returns, BCH could see a price recovery to around $378.10, which would counter the current bearish indicators.
Don’t Rely on BCH Charts Only
While chart analysis is a valuable tool for understanding market trends and making informed predictions, it should not be relied upon exclusively, as it often overlooks the broader context that can influence an asset’s price. Market sentiment, external economic factors, news events, and technological developments can all significantly impact the direction of a cryptocurrency like Bitcoin Cash (BCH), regardless of what the charts suggest.
For instance, positive developments such as a new partnership, an upgrade in the network, or favorable regulatory news can swiftly change the market sentiment, leading to a price surge even if technical indicators are bearish. Therefore, it’s important to combine chart analysis with fundamental analysis and stay attuned to market news and developments, as the situation for BCH could easily turn bullish despite the current technical outlook.
Understanding BCH
Since you are researching BCH it is only right to know where it came from. So here is a bird’s eye view on the network’s development over the years. Bitcoin Cash (BCH) was created as a result of a hard fork from Bitcoin (BTC), the original cryptocurrency. The fork was driven by a deep-seated debate within the Bitcoin community regarding how to scale the network to accommodate a growing number of transactions. As Bitcoin gained popularity, its blockchain began experiencing congestion, leading to slower transaction times and higher fees. The core issue was the 1MB block size limit on Bitcoin’s blockchain, which some believed was too small to handle the increasing transaction volume.
The disagreement centered around how to address this problem. One camp, which included the developers behind Bitcoin Core, advocated for a solution known as Segregated Witness (SegWit), which aimed to optimize how transaction data was stored on the blockchain without increasing the block size. This solution was viewed as a way to maintain Bitcoin’s decentralized nature by avoiding larger blocks that could require more computational power to process.
The other camp, which included developers and miners favoring larger block sizes, argued that simply increasing the block size limit was a more straightforward and effective way to scale Bitcoin. They believed that a larger block size would allow for more transactions per block, thereby reducing congestion and lowering fees. When it became clear that a consensus could not be reached, a group of developers and miners initiated a hard fork, splitting the Bitcoin blockchain and creating Bitcoin Cash, which adopted an 8MB block size limit (later increased further) to support more transactions per block.
Since its creation, Bitcoin Cash has positioned itself as a peer-to-peer electronic cash system, emphasizing fast, low-cost transactions, which was part of the original vision for Bitcoin as outlined in Satoshi Nakamoto’s whitepaper. BCH proponents argue that its larger block size allows it to be more practical for everyday transactions, unlike Bitcoin, which they see as increasingly becoming a store of value akin to “digital gold.”
Over the years, Bitcoin Cash has undergone further splits, most notably in November 2018, when another hard fork led to the creation of Bitcoin SV (Satoshi’s Vision). This split occurred due to differences in opinion over the future direction of Bitcoin Cash, particularly around the implementation of certain technical upgrades. Despite these challenges, Bitcoin Cash has maintained a significant presence in the cryptocurrency space, continuing to focus on its goal of enabling fast, reliable, and inexpensive transactions on a global scale.
