Since November 6, in exactly one month, the Bitcoin Cash price has dropped by 81.6 percent, from $638 to $117.
Initially, in the first week of November, the price of Bitcoin Cash (BCH) had begun to rise as the anticipation towards a hard fork on November 15 increased. Because a contentious hard fork was expected and a split chain was likely to occur, investors started to accumulate the asset.
In a split chain, a new cryptocurrency based on the original asset is created, and the holders of the original asset are rewarded with the newly created cryptocurrency. As such, when Bitcoin Cash hard forked, Bitcoin SV was rewarded to the holders of BCH.
Following the hard fork, which occurred with an intense conflict between the BCH and BSV camps, the BSV side led by Craig Steven Wright, Coingeek, and billionaire Calvin Ayre continued to issue threats against Bitcoin Cash.
It threatened to 51 percent attack Bitcoin Cash and to freeze the blockchain by spamming transactions. None of the threats were materialized, but they were enough to decrease the confidence of investors in the cryptocurrency market towards the short-term growth trend of both BCH and BSV.
Kraken, for instance, a major U.S.-based crypto-to-fiat exchange, announced that it simply cannot provide adequate custody of BSV and integrate the asset because of the attacks originating from the BSV camp.
“Bitcoin SV does not meet Kraken’s usual listing requirements. It should be seen as an extremely high risk investment. There are many red flags that traders should be aware of. Custodial losses taken on due to attacks originating from nChain or its affiliates will be socialized among all BSV holders on Kraken. Given the volatile state of the network and threats that have been made, Kraken cannot guarantee perfect custody of BSV,” the team said.
Consistent attacks sent out by one side of the ecosystem destabilized the two cryptocurrencies, which ultimately led to the decline in the price of BCH.
In the past month, while the price of BCH dropped by 81.6 percent, the Bitcoin price dropped by 42 percent, from $6,544 to $3,700. BCH experienced a sell-off that is nearly twice as large as the sell-off of BTC.
According to Peter Brandt, a prominent technical analyst, technical indicators of Bitcoin Cash portray a gloomy few months ahead for the asset. He said:
“BCH with charts like this it is easy to believe that the vast majority of coins will end up worthless.”
Massively oversold conditions and market exhaustion could allow most of the cryptocurrencies in the space to recover in the upcoming months. But, the sheer intensity of the short-term decline in the value of BCH could create a difficult position for BCH to undergo any significant recovery to escape its low price range.
In a bear market or a general downtrend, most low volume cryptocurrencies tend to underperform. As of December 6, the daily volume of BCH remains at around $110 million, less than 2 percent of the daily volume of Bitcoin.
Featured Image from Shutterstock. Charts from TradingView.
Last modified: June 14, 2020 9:35 AM UTC