Crypto Recon #3: Bitcoin Cash’s second birthday
Who doesn’t like birthdays, especially when you’re only two years old? On August 1st this year Bitcoin Cash could have blown two candles on the cake. However, is it a cake that is as good as the loudest Bitcoin fork up till now?
Do you remember that expectation, excitement and impatience in the crypto-currency environment in the summer of 2017? Everyone was anxious to see for what would be born on August 1st. Then one of the most spectacular forks of Bitcoin took place and at this moment it’s hard to point at a worthy rival in this respect. A cryptocurrency was created, which was supposed to overthrow the king.
Bitcoin Cash (BCH) has come to cryptocurrency the world with outstanding slogans such as greater scalability or lower transaction fees. The concept of this cryptocurrency was ideal. Here we were supposed to get the “crème de la crème” among the cryptocurrencies. A cryptocurrency that would be ideal for fast transfers and low fees. It was undoubtedly an encouraging move on the part of Bitcoin Cash to distribute free coins. Everyone who had 10 BTC also received 10 BCH.
The first weeks of BCH’s quotations were peaceful. An unexpected increase occurred at the beginning of November when the price of Bitcoin Cash suddenly jumped from $400 at its peak to $2600, and the Internet flooded the wave of speculation that Bitcoin Cash is a new, better Bitcoin.
The loudest person, at that time, was Roger Ver, one of the first bitcoin promoters, especially Bitcoin Cash.
The proverbial “pump” on BCH
The leading social media praising BCH was, of course, the website sponsored by Roger Ver – www.bitcoin.com. However, the scale of growth was the main topic discussed on most portals related to the cryptocurrency industry. Such a spectacular appreciation caused an influx of investors. However, the verification of the exchange rate with reality took place very quickly. The value of $4000 became only a shadow and still unsurpassed level two years after the BCH listing.
The first and undeniable argument for the supporters of the new cryptocurrency were larger transaction blocks (at that time they had a capacity of 8 MB, today 32 MB), which was to solve the problem of scalability of cryptocurrencies. This meant that the larger the block, the more transactions it could hold, and the number waiting for the mempool would decrease.
On September 1st, 2018, Bitcoin Cash was subjected to the largest test in its history, the so-called “Stress Test”. Its aim was to flood the network of this cryptocurrency with as many transactions as possible in order to check its capacity and how transaction fees will behave.
According to the BitinfoCharts source, on Stress Test day over 63% of all transactions in the world cryptocurrency are those coming from Bitcoin Cash. In addition, average transaction fees slightly decreased. Bitcoin Cash proved that it passed its test successfully and the price in one day increased from $550 by approx. 18% to $650.
It is, therefore, puzzling to know why, despite meeting the targets set for Bitcoin Cash, it has so far failed to achieve results such as Bitcoin, and as a result, there is no indication that the change in the position of the cryptocurrency king has changed.
Idea vs. reality
Satis Group, a company dealing with ICO consultancy and cryptocurrency market research, published in August last year a report “Cryptoasset Market Coverage”, which presented issues of future valuation of cryptocurrency-based projects and platforms.
However, Satis Group’s assumptions were not positive. According to the authors of the report, BCH, a hard fork of Bitcoin, wanted to create around itself a recognizable image threatening the real bitcoin. However, BCH did not offer any significant technological advantages over BTC. Thus, consistently leading to a decline in interest and, consequently, market capitalization.
Supposedly, we can expect that similar fate may happen to other projects resulting from network divisions of known cryptocurrencies.
According to the prognosis of Satis Group, Bitcoin Cash has lost more than half of its value during the year, falling to an average valuation of about $300 dollars. Over a decade, its estimated valuation is expected to fall to $180 dollars.
What are the chances for growth for BCH?
On the 2nd of September this year, a stock exchange under the patronage of BCH called Exchange.Bitcoin.com was established, where cryptocurrencies with the biggest market capitalization are available. Undoubtedly, this is a very interesting way to promote BCH, but at the moment, I do not see any changes in the price of this cryptocurrency, which would indicate interest in the project. It is possible that more time is needed for development and so-called “media noise” to notice the fluctuations and focus the attention of investors.
BCH vs BTC
Over the past few months, both charts have shown a similar level of market volatility. The scale of growths between the biggest differences was about 350% for BTC and 300% for BCH, respectively. However, we can now see that the price of BCH has fallen more heavily compared to its original. The BTC value at the time of writing this analysis is on average at the level of $10,500, which is about 250% higher than the first moments of April increases, while the BCH price is $300, which is about 170%.
As we can see, BCH is in a strong support phase of $270 and moves in a parallel channel between $350 and $235. The chart also shows the Head and Shoulder pattern, which suggests that it is more likely to move downwards now. It is also possible to try again to reach the upper limit of the parallel channel and to activate the supply side from that level.
For those who like to risk, I suggest buying at the current level, and for pragmatists, I suggest entering the market on the reaction of upward movement and buying at the resistance line marked on the parallel channel.I hope you will share the information about your investments and above all your view on the future of BCH.
I hope you will share the information about your investments and above all your view on the future of BCH.
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