Bitcoin Cash (BCH) experienced a substantial price rally in June 2023, driven by institutional investors seeking alternatives to prominent Proof of Stake (PoS) protocols amidst the SEC’s classification of several mega-cap altcoins as ‘securities’. However, Ripple’s (XRP) recent legal victory against the SEC has introduced uncertainty, potentially jeopardizing BCH’s price rally.
The month of June saw Bitcoin Cash (BCH) surge by an impressive 150%, making it one of the standout performers in the cryptocurrency market. This remarkable growth can be attributed to institutional investors flocking to Proof of Work (POW) altcoins amid concerns over potential SEC scrutiny of PoS protocols.
Following this surge, the Bitcoin Cash price rally showed signs of cooling off in July after reaching its peak for the year at $320 on June 30. Ripple’s victory against the SEC may impact market dynamics and cause investors to reconsider their allocations, potentially diverting capital away from Bitcoin Cash.
The Relative Strength Index (RSI) is an important technical indicator that assesses the strength and momentum of a price trend. BCH’s RSI has dropped below the critical 70 level, closing at 66.03 on July 13. This shift suggests that selling pressure is increasing and could signal potential bearish sentiment among traders. Some strategic traders may interpret this as a signal to take bearish positions on BCH in the coming days, further dampening the price rally.
Another factor contributing to the potential risks faced by Bitcoin Cash is the recent selling activity by price-savvy whales. These large institutional investors, who were among the key drivers of BCH’s price rally, have started offloading their holdings. Since the beginning of July, whales holding between 1 million to 10 million BCH have reduced their balances by 100,000 coins. With the current market price of $275, this sell-off translates to a withdrawal of over $27.5 million from Bitcoin Cash within just half a month.
The chart illustrating the whales’ wallet balances reveals that their buying activity coincided with the start of the Bitcoin Cash price rally in mid-June. Therefore, their current selling frenzy introduces additional risk to the price rally, potentially dampening market sentiment further.
Ripple’s legal victory against the SEC has triggered improved market sentiment surrounding altcoins that have faced regulatory challenges. This shift in sentiment may prompt investors to withdraw funds from Bitcoin Cash and reallocate them to tokens that have been undervalued due to regulatory concerns but are now experiencing a resurgence in interest.
Considering the critical bearish indicators discussed above, BCH could be poised for a potential price reversal towards the $200 range. However, the bears must first overcome the buy wall support around $250. IntoTheBlock’s GIOM data reveals that 513,220 investors purchased 1.69 million BCH coins at a maximum price of $253. If the Bitcoin Cash price approaches $250, these investors may enter the market to cover their long positions, providing temporary support.
However, should this support level fail to hold, BCH could slide towards the predicted $200 range. The bears’ ability to break through the $250 support level will play a crucial role in determining the direction of Bitcoin Cash’s price in the near term.
On the other hand, if the bulls regain control, BCH may experience renewed bullish momentum. A break above the resistance level around $300 could trigger a rally. However, the $286 resistance level may prove to be a significant hurdle. Around this zone, 1.39 million addresses hold 2.58 million BCH purchased at an average price of $286. If BCH manages to break above this resistance, it could rally towards $300 once again.
As the cryptocurrency market continues to evolve, investors must stay informed about regulatory developments, market trends, and technical indicators. It is important to remember that the cryptocurrency market is highly volatile, and making informed decisions based on thorough research is crucial.
In conclusion, Bitcoin Cash’s price rally faces challenges following Ripple’s legal victory against the SEC. Increasing selling pressure, as indicated by the drop in the Relative Strength Index, along with the selling activities of price-savvy whales, introduce potential risks to BCH’s price rally. Traders anticipate a potential price reversal towards the $200 range, while a breakthrough above $300 could signal renewed bullish momentum for Bitcoin Cash.
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