The original Bitcoin Cash (BCH ABC) is having a gala day at the crypto market as it rises 40% and beyond.
The BCH/USD price on Thursday has extended its prevailing bullish bias to register new highs at 182 on Coinbase. On weekly basis, the pair has noted a 182% jump from its so-called bottom near 74, coupled with a relatively higher trading volume across all the leading crypto exchanges.
The BCH/USD downside meanwhile is capped by its 100-period moving average curve, coinciding with 104.27 at this moment. We could see price testing the said level as a part of a minor correction before it resumes the uptrend. The best rally target we could see from here is at 272, which was instrumental to a downtrend on Nov 21.
On the mining front, Bitcoin Cash hash rate has also dropped significantly in the past month. It used to be around an average of 5 Exahash per second (EH/s) but now has reduced to 1 EH/s to 850 Petahash per second (PH/s) through this December. It has eventually made mining BCH more profitable than Bitcoin, a reason why the BCH market is leading the overall crypto surge as of now.
Will Uptrend Extend?
For a cryptocurrency that had generated a lot of negative buzz due to its chain upgrade, ultimately crashing harder than any other top crypto asset, Bitcoin Cash undergoing a strong rebound is a welcome change to the market. However, despite the strong bullish sentiments in the near-term, the coin has a lot of hurdles to establish a sustained upside bias.
To begin with, the entire market is still locked inside a long-term downtrend, which also includes Bitcoin Cash. Therefore, a meager jump after a heavy crash could also be a nominal correction, a flag or pennant formation, or a call of short traders to exit their positions. It does not guarantee a full-scale recovery – not unless we see some levels broken in the medium-term, at least.
The RSI momentum indicator on the daily chart, for instance, has clearly recovered from its oversold conditions, to enter into overbought territory, but that can take Bitcoin Cash as far as, say, the 50-period moving average level. Bulls would need to do more than that to reinstate investors’ faith in Bitcoin Cash, as well as the rest of the market.
The latest uptrend is a small step towards an unlikely 100% recovery to an all-time high in the short-term and much of its responsibility is lying on the leading digital currency Bitcoin. For good or worse, Bitcoin is hopeful to pave way for the rest of the crypto market to be accepted for their characteristics in the mainstream. While Bitcoin Cash believes that is technologically better than bitcoin, it would also need to watch its adoption go high in the mainstream to be able to attract parallel investments – both from retail and institutional investors.