is the altcoin a dip buy?

The price of bitcoin cash (BCH) remains below $600 after spiking to a three-month high in September of $783 but that is still a long way off its 2021 high of $1,482. It was ranked 21st with a market capitalisation of $11.1bn at time of writing (1 November). 

BCH’s connection to bitcoin (BTC) seems to be weakening. Bitcoin is racing to all-time highs while BCH lanquishes in the hinterlands of its 2021 lows. BTC has been boosted by ProShares launching its futures Exchange-Traded Fund (ETF) in mid-October while most altcoins have lagged. 

What is bitcoin cash and how does it differ from bitcoin and bitcoin gold (BTG)? Is the recent dip an opportunity to buy into the cryptocurrency before it resumes its upward trend, or is there potential for the price to fall?

In this article, we look at the effect of the latest bitcoin cash news on the price and the long-term outlook for the coin.

Bitcoin cash targets high transaction volumes

Bitcoin cash is a hard fork, or spinoff, from the Bitcoin blockchain that occurred on 1 August 2017. The split came about because the Bitcoin community could not reach consensus on a proposal to increase the network capacity to allow for more transactions. 

Anyone who held bitcoin at the time received bitcoin cash, which has a higher maximum block size. The protocol initially increased the block size from 1MB to 8MB, and it now supports blocks of up to 32MB. The developers are researching the possibility of “massive future increases”. The higher block size enables bitcoin cash to process far more transactions per second while keeping fees low – a solution to the payment delays and high fees that some bitcoin users experienced.

Bitcoin cash has a different aim than bitcoin gold, launched in October 2017, which focuses on restoring decentralised mining after it became dominated by large mining farms. BCH aims to be peer-to-peer electronic cash – simple and fast to use, with low fees for sending money globally. The low fees enable micro-transactions, like tipping content creators and rewarding app users small amounts of money.

There was a hard fork of bitcoin cash in November 2018, as disagreements continued in the community about the maximum block size for transactions, resulting in the creation of bitcoin SV (BSV). The block size limit is unbounded and can scale in response to the market. In August, the maximum block size quickly increased from 1GB blocks to a 2GB block processed on 18 August – claimed to be the largest block that’s been mined on a public blockchain so far.

Like bitcoin, the supply of bitcoin cash is capped at 21 million coins. There are currently 18.88 million coins in circulation, according to CoinMarketCap. The fixed supply is intended to limit inflation and make bitcoin cash a sound store of value. With the price of $587 on 1 November, bitcoin cash has a market capitalisation of around $11.01bn, ranking it the 21st largest cryptocurrency.

BCH price reaches three-month high

The bitcoin cash price climbed to an intraday high of $801.49 on 6 September, its highest level since late May, when cryptocurrencies retreated from their sharp rally. While bitcoin reached an all-time high above $64,000 in April, BCH peaked at $1,635.15 on 16 May, well below its record high of $4,355.62 of December 2017 during the previous cryptocurrency bull run.

The price had retreated to an intraday low of $596.71 by 13 September, although it ticked higher to $654.27 on 16 September after the chief executive of US cinema chain AMC (AMC) said that the company would accept bitcoin cash along with bitcoin, ether (ETH) and litecoin (LTC) as payment for online tickets and concessions by the end of the year.

Adoption of bitcoin cash has been increasing, with digital payments company PayPal (PYPL) announcing on 23 August the rollout of a new service in the UK that allows customers to buy, hold and sell bitcoin cash along with bitcoin, ether and litecoin via the PayPal website or the mobile app. The move expands the company’s cryptocurrency service offering outside of the US.

On 10 September, cryptocurrency investment company Greyscale announced that it had registered the Grayscale Bitcoin Cash Trust with the US Securities and Exchange Commission (SEC), along with trusts for ethereum classic (ETC) and litecoin, joining its existing bitcoin, ethereum and Digital Large Cap trusts. It had announced plans to form the new trusts in April.

The company said:

“This development aligns with Grayscale’s intent to move each of its digital currency investment vehicles through the product development pipeline described in an April 2021 blog post, ultimately to convert each product into a digital currency ETF.”

Cryptocurrencies like bitcoin cash, bitcoin and litecoin got a boost in early October when US Bank, the country’s fifth largest retail bank, first offered a cryptocurrency custody service with assistance from sub-custodian NYDIG for fund managers to store their private keys.

Later in October, a leading provider of ETFs launched the first bitcoin linked service in the US.  Called Pro Shares Bitcoin Strategy ETF (BITO), it gives investors the chance to take their bitcoin returns through a brokerage account. BITO can be bought and sold like a stock and, says the company, “eliminates the need for an account at a cryptocurrency exchange and for a crypto wallet”. 

The move will provide a boost to BCH as CEO Michael L. Sapir explained: “BITO will open up exposure to bitcoin to a large segment of investors who have a brokerage account and are comfortable buying stocks and ETFs, but do not desire to go through the hassle and learning curve of establishing another account with a cryptocurrency provider and creating a bitcoin wallet or are concerned that these providers may be unregulated and subject to security risks.”

What do forecasting sites predict for the direction of the bitcoin cash future price? Is there potential for the coin to return to its previous highs?

Bitcoin cash price predictions 2021-2025: what’s next for the coin?

Short-term sentiment for BCH has been bearish, with the price around $587 at the time of writing (1 November), according to CoinCodex. There were 17 technical analysis indicators giving bullish signals, compared with 12 bearish signals. The 3 to 5 day simple (SMAs) and exponential moving averages (EMAs) were showing buy signals, while the 100 to 200 day simple (SMAs) and exponential moving averages (EMAs) were showing sell signals while the moving average convergence divergence (MACD) and the relative strength index (RSI) were neutral.

In the meantime, the bitcoin cash (BCH/USD) forecast from Wallet Investor is bullish, predicts that the average price could hit $1,182 by the end of 2021, then rise to $1,507 by the end of 2022 and reach $2,453 by the end of 2025.

One-year BCH price forecast]

The BCH price prediction from DigitalCoin projects that the price might average $1,037 in 2022, up from $845.69 in 2021, then continue rising to an average of $1,682 in 2025 and $2,659 in 2028.

BCH price predictions 2021–2028

The forecast for bitcoin cash from Price Prediction is the most bullish, suggesting the coin could climb from an average of $661.35 in 2021 to $2,863.03 in 2025 and soar to an average price of $19,837.91 by 2030.

It’s important to keep in mind that cryptocurrency markets remain extremely volatile, making it difficult to accurately predict what a coin’s price will be in a few hours, and even harder to give long-term estimates. As such, analysts and online forecasting sites can get their predictions wrong.

We recommend that you always do your own research, and consider the latest market trends, news, technical and fundamental analysis, and expert opinion before making any investment decisions. And never invest more than you can afford to lose. 

Edited by Valerie Medleva

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Read More: Bitcoin gold price prediction: Will the altcoin rise?

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