IS BCH Ready for a Market Correction?
2018 has been a rocky year for the cryptocurrency market so far. Prices have plunged from their all-time highs in December last year and in the last two months, trading volumes have dipped and prices have struggled to beat resistance points. However, in the last ten days or so, there seems to have been a turnaround in the cryptocurrency market.
Of these top ten cryptocurrencies in the world, the one that has performed the best is Bitcoin Cash. The market as a whole saw an upswing, but BCH has left its peers far behind with its rally.
On April 15, the markets confirmed that the world’s fourth-largest cryptocurrency had started a bull run. Its price has jumped a whopping 93.98% today’s trading price of $1,507.77. In fact, the cryptocurrency has outperformed its peers in the last 7 days.
Why Has BCH’s Price Soared?
According to market analysts, the upcoming hard fork is playing a big role in the cryptocurrency’s price surge. The Bitcoin Cash network is due for a technical upgrade – the crypto’s underlying code is going to be upgraded on May 15. This will increase BCH’s block size from 8MB to 32MB.
However, unlike the usual hard forks, where a new coin is created, this upgrade may simply replace the old version with an updated one, if there is enough support for the plan in the BCH community.
Thus, while no new “money” is being created this time around, hard forks are traditionally associated with “free money” and that may be what has pushed prices up for the cryptocurrency. However, once investors realize that this hard fork is not handing out free money and is actually just a software update, BCH’s rally may reach its end.
Overbought Conditions
While the prices might be looking good at this time, market analysts are also advising some caution. Technical charts indicate that the cryptocurrency is actually overdone and that a pull-back or market correction may be in the offing.
The overall market sentiment remains bullish and daily trading volume has jumped by 374% week-on-week, however, the Relative Strength Index is at 80, which means the crypto is overbought.
Thus, you can expect the price of Bitcoin Cash to fall to a moving average support for $1,167. However, these dips are expected to be short-lived. The only way the bullish trend in progress right now would be aborted would be if the price of the cryptocurrency drops to a daily close of $978.