Why An Analyst Expects Bitcoin Cash’s Absurd Rally to Continue
Over the past few days, Bitcoin Cash (BCH) has seen a crazy rally. On Friday, the cryptocurrency gained 14%, actually becoming the fourth-largest cryptocurrency yet again.
The foremost Bitcoin fork was seemingly rallying on news that Craig Wright, the Australian cryptographer and coder that claims to be the creator of the Bitcoin chain, may have access to a third “Tulip Trust,” which is a Trust that purportedly has access to billions of dollars worth of Bitcoin (BTC) and likely the aforementioned forks due to the private keys.
The purported idea with the Bitcoin forks surging on this news: if Wright actually has the funds and gains control of them, he would dump the BTC on the market en-masse to suppress the Bitcoin chain he hates while pushing the price of the forks higher.
Despite the fact that this move seems to be primarily based on speculation, analysts expect the gains to be extended. Cryptocurrency trader Bagsy recently posted the below tweet, giving four main reasons why he expects for BCH to see bullish price action against Bitcoin in the coming weeks: the halving for the cryptocurrency approaches, it has tapped a horizontal resistance for the fourth time, there is a massive bullish divergence forming on high time frames, and volume is growing, setting the stage for a rally.
While Bagsy is convinced BCH will continue to surge higher, there is a key reason why this move may not be sustainable.
Like Bitcoin, the Cash and Satoshi Vision forks also have block reward reductions, known as halvings, built into their protocols. While analysts expect Bitcoin’s next halving will push the price of BTC higher, there is a sentiment that the halvings for BCH and BSV could potentially “lead to their ultimate demise.”
First, he noted that due to mining shenanigans, BCH’s block height, meaning the number of blocks in the chain, is thousands more than that of BTC. While this may seem negligible, Celermajer noted that this discrepancy in the block heights of BTC and BCH will likely lead miners of the latter chain to abandon it for BTC due to profitability concerns. The analyst explained:
“In April, when miners start receiving half the BCH and BSV rewards they currently receive, their profits will half (unless price doubles). This will lead to miners switching to mine Bitcoin which will not have a reduction in profitability until May.”
This simple dynamic, he wrote, is likely to create “massive market fear and capitulation” among the investors of the two key forks, “potentially leading to their short term and longer term demise.”
0/ The upcoming having events of Bitcoin Cash and Bitcoin SV could very well lead to their ultimate demise. I’ll explain why below
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