For a cryptocurrency which has dropped 98 percent from its all-time high already, bitcoin cash — for now — is looking brave in the face of a powerful bearish sentiment.
The cryptocurrency’s ABC version this week surged close to 150 percent against the US dollar, from about $71 to $182 on a 7-day timeframe. The uptrend came as a part of a market-wide recovery in which all the leading coins posted impressive profits. The bulls in the crypto space also appeared at a time when the US stock market was plunging hard. Overall, bitcoin cash turned out to be the most profitable asset on a weekly basis, even better than Apple stock.
The latest recovery action at most compensates 3 percent of the total bitcoin cash losses, bringing the overall capital erosion to 95 percent since all-time high. But whether or not it would extend the ongoing recovery action clearly depends on two major factors: mining profitability and demand from investors.
Since the fork, the exchanges that had paused BCH trading have now resumed it. In the last three weeks, the BCH volume rate is averaging at 10k on daily basis. There have been few instances in which the volume has peaked as high as 22k, but whether or not these figures are artificially inflated remains unverifiable at present.
The mining profitability of bitcoin cash has also improved in recent weeks. After the fork, the coin’s hash rate has dropped significantly, but it has made the mining operations more profitable. According to the CoinWarz SHA256 index, bitcoin cash is more profitable than bitcoin at press time.
The bitcoin cash recovery does very little to compensate for the losses it faced in November, let alone the whole year. The bitcoin-spinoff just concluded a so-called hash war with its own clone, dubbed bitcoin cash satoshi vision, or bitcoin SV. Both the projects reportedly wasted millions of dollars worth of computing power to prove supremacy over each other. Bitcoin cash appeared to win after proving a longer chain than bitcoin SV but lost $9 billion market capitalization as collateral damage.
As of now, the cryptocurrency is showing signs of a pullback. Its market performance on an adjusted 24-hour timeframe is noting an aggregated 8 percent loss at press time, per CoinMarketCap.com. The pullback resembles the reversals noted during many of bitcoin cash’s previous uptrends. Between September 30 and November 2, for instance, the asset had recovered by almost $222, after which it plunged further to establish new lower lows.
Overall, the bitcoin cash recovery does very little to reinstate the investors’ faith in the cryptocurrency. A more interim bullish bias scenario is hoping to be established once the price crosses above its 50-period MA on the daily chart. Until then, the likelihood of a double bottom formation lingers over the BCH market.
Featured Image from Shutterstock. Charts from TradingView.
Last modified: May 20, 2020 1:20 PM UTC