Bitcoin Cash (BCH) Price Rejected in Attempt to Hit $500 Amid Sharp Drop in Funding Rate

Key Takeaways

• Bitcoin Cash is down nearly 10% after topping $430 last week, falling below key levels and cooling its push toward $500.
• On-chain data shows BCH funding rates turning negative, signaling rising short positions and growing bearish sentiment.
• A dome-shaped rounding top pattern on the 4-hour chart points to a loss of buyer control, with downside targets at $345.20.

After sprinting past $400 last week, Bitcoin Cash (BCH) has hit a critical juncture. Over the past seven days, Bitcoin Cash’s price has dropped nearly 10%, paring back some of its recent gains.

Despite earlier signs of bullish strength, the decline has delayed BCH’s push toward the $500 mark. With momentum now cooling, the question is: what’s next for BCH?

Bearish Crossovers Threaten BCH

On May 8, Bitcoin Cash surged past $430, marking its highest price since early February. The breakout followed a decisive move above the upper trendline of a descending triangle, typically a bullish pattern.

The daily MACD flashed a bullish crossover at the time, with the indicator turning positive. The signal was validated as the 12-day Exponential Moving Average (EMA) crossed above the 26-day EMA, reinforcing bullish momentum.

However, BCH has since retraced. Today, the price has dropped to $390, falling below the breakout trendline of the ascending triangle.

Besides that, the MACD has slipped into negative territory, hinting at a potential change in trend. The 12 EMA (blue) is on the verge of dropping below the 26 EMA (orange),  a setup that would confirm a bearish crossover.

If that crossover plays out, it could accelerate downside pressure and potentially push Bitcoin Cash’s price toward the support at $352.89.

Shorts Dominant

Furthermore, on-chain data suggests growing bearish pressure on Bitcoin Cash. According to Glassnode, the funding rate for BCH has dropped into negative territory, a trend that signifies the increased dominance of short positions in the derivatives market.

In the crypto market, a negative funding rate implies that shorts (sellers) are paying longs (buyers), indicating that traders expect further downside. On the other hand, a positive rate would suggest bullish sentiment, with longs paying to maintain their positions.

The simultaneous drop in BCH’s price and funding rate indicates a key trend: shorts are gaining control and being rewarded for their positions.

If this trend continues, Bitcoin Cash’s price could remain locked in a bearish pattern, with limited upside in the near term.

BCH Price Analysis: Lower Values Next

On the 4-hour chart, BCH’s price also forms a bearish pattern. The cryptocurrency seems to be creating a dome-shaped rounding top pattern as seen below.

This signifies that the uptrend has lost momentum and buyers are no longer in control. If this continues, Bitcoin Cash’s price might fall below support at $371.95.

If that happens, the next target for the altcoin could be a decline to $345.20 near the 0.382 Fibonacci level. BCH might see its value decline to $312.10 in a highly bearish scenario.

On the flip side, if the cryptocurrency fails to drop below the support mentioned above, and buying pressure increases, this forecast might not pass.

If that were to happen, BCH’s price could rise above $485.20, possibly hitting $500 in the short term.