Home / Analysis / Crypto / Technical Analysis / Bitcoin Cash Price Tests $350 Support as Mt. Gox’s 143K BCH Release Looms – Bounce or Breakdown Next?

Bitcoin Cash Price Tests $350 Support as Mt. Gox’s 143K BCH Release Looms – Bounce or Breakdown Next?

Last Updated June 25, 2024 9:28 AM
Valdrin Tahiri
Last Updated June 25, 2024 9:28 AM

Key Takeaways

  • Mt. Gox announced it will distribute 143,000 Bitcoin cash to creditors in July.
  • The BCH price reached the 112-day horizontal support area at $350.
  • Will BCH bounce at this support, or will the extra supply cause a breakdown?

Bitcoin Cash is at a crucial point as it struggles with a persistent downtrend. The BCH price has been declining since its yearly high in April, falling to a 112-day support level at $350. This is despite having increased over 50% in 2024.

This support area is now under pressure as Mt. Gox, the defunct Japanese exchange, prepares to distribute 143,000 BCH to creditors in July 2024. Will BCH bounce back from this support level, or will the additional supply push the price even lower?

Mt. Gox Announces Repayment

Mt. Gox announced it will begin distributing recovered Bitcoin (BTC) and Bitcoin Cash to creditors starting in July 2024.

This distribution marks a key step in the ongoing rehabilitation process  following the exchange’s collapse in 2014 due to a major hack. The recovered assets include 142,000 BTC, valued at approximately $8.8 billion, and 143,000 BCH, worth around $400 million.

Creditors will receive their portions through exchanges that have completed the necessary procedures with the Rehabilitation Trustee.

Some X users do not believe the payments will happen, since there have been several announcements in the past that did not lead to anything. Other believe this will be the market bottom , since that is what happened the last time there was negative news surrounding Mt.Gox.

It is worth mentioning that BTC has a circulating supply of 19,716 million while BCH has a circulating supply of 19,724 million. So, the releases will increase the circulating supply by less than 1%.

When further considering that the release will be periodic instead of a lump sum payment, lasting from July to October, it is not likely to have a major effect on the price.

Our previous analysis of token unlocks of less than 10% of the total supply have not caused a significant effect on the price.

BCH Gives Bullish Signal at Support

The daily time frame Bitcoin Cash price chart shows a decline under a descending resistance trend line since the yearly high of $718.21 on April 5. The decrease culminated with a low of $344 on June 24.

The BCH price bounced today, on June 25, validating the $350 area as support. This is a critical support area since it has existed for the past 112 days. So, whether the price breaks down from the area or breaks out from the descending resistance trend line instead will be critical in determining the future trend’s direction.

Bitcoin Cash Price Decline Daily
BCH/USD Daily Chart | Credit: Valdrin Tahiri/TradingView

The daily RSI and MACD both give bullish signals. The daily RSI has fallen into oversold territory (green circle) while the daily MACD has generated bullish divergence.

Interestingly, the previous time this happened was also at a long-term horizontal support area. Then, the BCH price broke out from a descending resistance trend line beginning the increase toward the yearly high.

BCH Price Previous Signal
BCH/USD Daily Chart | Credit: Valdrin Tahiri/TradingView

So, it is possible a similar movement will follow this time around, which will be confirmed by a breakout from the resistance trend line.

What’s Next for the BCH Price?

Since the daily time frame price chart and indicator readings give a bullish outlook, the wave count can determine the potential targets for the ensuing upward movement.

The most likely count implies the Bitcoin Cash price is completing wave four of a five-wave upward movement (white), which started in June 2023. The defining characteristic of this movement is the breakout from an ascending parallel channel, which indicates the increase is impulsive.

A potential target for the top of the movement is between $950-$975. The 1.61 external Fibonacci retracement of wave four creates the lower portion of this target. Giving wave five the same ratio as waves one and three gives the upper portion.

BCH Wave Count
BCH/USD 3-Day Chart | Credit: Valdrin Tahiri/TradingView

Despite this bullish outlook, falling below the wave one high (red) at $333 will put this bullish count at risk. This is because Elliott Wave rules state that wave four cannot fall into the territory of wave one.

If that happens, the expanding diagonal bullish possibility will still be at play. However, a breakdown below the channel’s support trend line at $310 will confirm the trend is not bullish.

Will BCH Fall Against BTC?

Some traders believe that BCH will fall against BTC when the release happens since users are likely to swap their BCH for BTC.

However, the BCH/BTC chart is not bearish. To the contrary, the BCH price began an upward movement after falling to a new all-time low in June 2023 and reclaimed the ₿0.005 horizontal support area. Then, it validated it as support in the start of 2024 (green icon), creating an ascending support trend line.

BCH/BTC Long-Term Price
BCH/BTC 3-Day Chart | Credit: Valdrin Tahiri/TradingView

Currently, the Bitcoin Cash price trades just above this trend line and so does the RSI (green). So, the current conditions are ripe for a price bounce. This bullish BCH prediction will be rendered invalid with a breakdown from the trend line, which can cause a drop to ₿0.005.

BCH Could Have Bottomed, Mt. Gox Selling Pressure Likely Irrelevant

The Mt. Gox selling pressure is an inconsequential portion of the circulating Bitcoin Cash supply. So, it is not expected to have a notable effect on the price. Furthermore, the BCH price trades inside long-term support and has given a bullish signal. This is true for both the BCH/USD and BCH/BTC pairs.

Please note that the contents of this article are not financial or investing advice. The information provided in this article is the author’s opinion only and should not be considered as offering trading or investing recommendations. We do not make any warranties about the completeness, reliability and accuracy of this information. The cryptocurrency market suffers from high volatility and occasional arbitrary movements. Any investor, trader, or regular crypto users should research multiple viewpoints and be familiar with all local regulations before committing to an investment.
Was this Article helpful? Yes No