Like most cryptocurrencies, Bitcoin Cash is difficult to predict because there is such a multitude of factors that can affect the BCH price performance. Some of these factors are harder to analyze and anticipate than others. Let’s take a closer look at the cryptocurrency industry as it pertains to the BCH market.
Factors with a positive impact
Bitcoin continues to suffer from scalability issues. This is one of the main reasons Bitcoin Cash came into existence. The more popular Bitcoin became, the harder it was to maintain fast transactions and low costs. If Bitcoin fails to fix their scalability problem, they could lose investors to Bitcoin Cash, since it can ensure faster and cheaper deals. As of today, the BCH block can hold 32MB of data, while Bitcoin is capable of processing only 1MB blocks.
Thanks in no small part to larger blocks, miners have quit mining Bitcoin and moved to mining Bitcoin Cash. This has spurred the growth of Bitcoin Cash, and if this trend persists, this will cause the price of BCH to go up as its appeal to miners increases.
The Name Is an Advantage
Bitcoin Cash shares a name and a history with Bitcoin. Since Bitcoin is the most widely known and widely used digital currency in the world, this is a huge advantage. Cryptocurrency enthusiasts who trust the Bitcoin name are more likely to trust Bitcoin Cash over alternative coins since they will have more faith in the platform. However, the name is not the only thing Bitcoin Cash shares with Bitcoin.
At 21 million, the supply of Bitcoin Cash is extremely limited. This works in its favor. There is already over 17 million BCH in circulation. Assets that have a smaller supply will almost always have a higher price tag. Rarity gives value. This will make Bitcoin Cash appealing to traders and investors because the tokens have a lot of selling potential. In fact, Bitcoin Cash is already the second most valuable cryptocurrency in the market after its elder brother Bitcoin.
Despite the low supply, BCH is easy to obtain right now. The token is listed on almost every major cryptocurrency exchange. Chances are that it is listed on the exchange you are currently using. BCH is also compatible with most cryptocurrency wallets. Overall, Bitcoin Cash is much more accessible than most other altcoins. This also adds to the trustworthiness of the token. No one is going to think that BCH is obsolete or obscure, which is often the case with less known altcoins.
Factors with a negative impact
Bitcoin Cash’s ties to Bitcoin is a double-edged sword. Definitely, the name gives it more credibility. However, Bitcoin is also an immediate competitor to Bitcoin Cash – the competitor that is extremely difficult to dethrone. This is problematic simply because Bitcoin has a supreme presence on the cryptocurrency market. Some altcoins have the benefit of being able to market themselves as entirely unique from Bitcoin. Bitcoin Cash cannot do that. Most people who once invested in BTC have no need to also invest in BCH.
Moreover, there are other coins out there that do not have the Bitcoin name but also market themselves as peer-to-peer cash. They include Dash and Litecoin. Some of these other tokens have very low fees and transaction rates, even when compared to Bitcoin Cash. Competition, in general, is a major concern, especially since the market right now is so bloated. Every time a new competitor emerges, it threatens to lower the popularity of BCH, as well as the price.
Another thing that influences the price of BCH is adoption. The more stores, restaurants, bars, service providers, etc. that adopt BCH as a payment option, the more usable this currency becomes. In turn, wider adoption among merchants results in more people within the crypto community wanting to own Bitcoin Cash.
As the case currently stands, not enough community members hold BCH. At least for now, this is going to prevent Bitcoin Cash from growing at its optimal rate. Adoption has been a consistent issue for many cryptocurrencies, but Bitcoin Cash is trying to solve it by introducing innovations to their protocol. This is a promising sign.
Whales have always had a key impact on the cryptocurrency market. With most major digital tokens, there’s still a small number of big-time investors who hold a massive percentage of the total tokens in circulation. This is true of Bitcoin, in particular. These whales not only exert a lot of power on the crypto market but also stand to stabilize the Bitcoin market. In a market that is notorious for its volatility and unpredictability, this could have a major impact across the board. It would definitely influence the price of Bitcoin Cash just as well.
Measures adopted by governmental bodies can have major effects on the price of BCH. For example, positive actions taken by South Korea have led to a surge in excitement around cryptocurrency and caused the prices to rise. In contrast, when negative actions happen, it can send investors running in the opposite direction. Last year, Venezuela made news for arresting Bitcoin miners that had a direct impact on the whole market. Something like that might make BCH miners think twice about mining.
A lot of investing and trading decisions are driven by emotions, especially fear and excitement. This can have a profound impact on the price of cryptocurrencies, including Bitcoin Cash.
Mining is Not Decentralized
A final thing that affects the price of BCH is mining practices. Right now there are a handful of mining pools that mine the majority of Bitcoin Cash. This is a key setback as it causes Bitcoin Cash to lose its appeal as a decentralized currency. Crypto tokens are touted as a decentralized alternative to government-backed currencies. Unless mining becomes more dispersed, this situation could hold the price of BCH back.
There are so many different details to keep in mind that it makes predicting price movements a constant chance. That said, the more you follow the news and analyze trends, the better you will be able to make wise trading decisions. While there are plenty of other factors that have the potential to drive the price of BCH up and down, these are just some of the most significant motivators. Other things like publicity and market manipulations can also affect cryptocurrency prices significantly.