Following the collapse of FTX, Bitcoin cash price was one of the most affected cryptos, dropping by over the 30 per cent in the week that details came that the company was going bankrupt. Since then, Bitcoin Cash has recovered most of the losses, and today, it is trading 25 percent above the price lows it hits during the early November collapse. However, in the past few weeks, the general trend of Bitcoin Cash has been bearish, with today’s session dropping by a percentage point.
Why is Bitcoin Cash Failing?
Bitcoin Cash (BCH) is a peer-to-peer electronic cash system that was developed by Bitcoin miners and developers as a derivative of the original Bitcoin (BTC) blockchain. BCH offers faster and cheaper transactions than BTC but has not been able to gain the same level of adoption or excitement. BCH is highly correlated with BTC, with a correlation coefficient of 0.94, meaning that it is likely to be affected by the same market forces.
One of the main reasons for BCH’s failure to break through in the crypto market is its high correlation with BTC. The correlation coefficient between BCH and BTC is currently 0.94, meaning that they are likely to be affected by the same market forces. This has made it difficult for BCH to differentiate itself from BTC and gain traction among investors.
Another reason for BCH’s lack of success is the absence of any unique use cases that distinguish it from other cryptocurrencies. In fact, its association with BTC pits it in competition with the original cryptocurrency, which does not serve it well. This has made it hard for investors to get excited about BCH and has contributed to its failure to break through in the crypto market.
BCH emerged from a group of miners who disagreed with the direction of the original BTC network and wanted to increase the size of its blocks to support more transactions per second. However, BCH has failed to gain widespread adoption and has fallen out of the top 10 assets by market capitalization.
This may be because many investors abandoned the cryptocurrency after realizing that the “improved Bitcoin” narrative was just hype and that the original BTC already fulfilled its role as decentralized and uncensored money. Additionally, the slow arrival of the Lightning Network (LN) for BTC, which was designed to improve its scalability, may have reduced the need for BCH.
Currently, the market sentiment for BCH is bearish, with long traders still active but selling at a loss. A negative breach of the $99.47 price range could trigger a sell-off and further losses for BCH. Additionally, the slow arrival of the Lightning Network (LN) for BTC, which was designed to improve its scalability, has reduced the need for BCH and contributed to its failure to gain widespread adoption.
In summary, BCH’s association with BTC, lack of unique use cases, and bearish market sentiment have all contributed to its failure to break through in the crypto market.
Bitcoin Cash Forecast
As seen from the above fundamental analysis, Bitcoin Cash has been struggling due to many market factors that are beyond its control. On the fundamental side of things, this has been reflected by the continued drop in the markets and long-term bearish price action.
Therefore, my Bitcoin Cash price forecast expects the current bearish trend to continue. There is a high likelihood that we might see prices dropping below the $100 price level again before the end of the year. However, a trade above $115 will invalidate my bearish analysis.
Bitcoin Cash Daily Chart
