Bitcoin Cash (BCH) has reclaimed the $200 territory as the bulls look to reclaim losses from the altcoin market slump in mid-August. A vital on-chain indicator suggests that the BCH price rally is still some way off peak momentum. How high can the BCH price go?
On August 28, a US court ruled that the Securities and Exchange Commission’s (SEC) decision to reject the Grayscale Bitcoin ETF application was “arbitrary and capricious.” In reaction, the price of Bitcoin Cash (BCH) rallied 15% as the crypto markets reacted positively to Grayscale’s landmark victory. But how high can the Bitcoin Cash bulls push the price?
Bitcoin Cash Price Rally Has Not Reached Its Peak
Despite Tuesday’s double-digit percentage price increase, the BCH price rally is still far from its peak momentum. The uptrend in the Network Value to Transaction Volume (NVT) ratio confirms this thesis.
As shown below, the Bitcoin Cash NVT ratio has continued to trend upward since the BCH price dropped from the 2023 peak of $329 on June 30. Following the flash crash on August 17, the NVT ratio rose, reaching another local high of 366 on August 30.
In simple terms, the NVT ratio weighs the current market capitalization against the underlying transactional activity. An increase in the NVT ratio means that while market prices are dropping, the Bitcoin Cash network is still experiencing a healthy volume of economic activity.
Typically, this is a positive signal, suggesting that the current transactional activity could still spur more price gains if the bullish market momentum grows.
Bitcoin Cash Miners Could Throw a Spanner in The Wheel
Despite the multiple green signals, BCH miners’ prolonged bearish trading activity raises significant concerns.
On-chain data shows that BCH miners held 8.38 million coins in their reserves when the 2023 price rally first began around June 20. But as of August 30, the cumulative balances have now dwindled to just 5.97 million BCH.
This means that they have now sold off nearly 2.41 million coins worth approximately $525 million
Miner Reserves track real-time changes in the cumulative wallet balances of recognized miners and mining pools. When Miners deplete their reserves over a prolonged period, as seen above, it could increase selling pressure. Evidently, the Miners’ selling pressure had recently put immense downward pressure on BCH’s price.
In summary, if the miners continue to sell, they could significantly slow down the ongoing Bitcoin Cash price rebound.
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BCH Price Prediction: Potential Roadblock at the $230 Range
Drawing inferences from these data points, rather than ride high to a new 2023 peak, the BCH price will likely consolidate above the $220 range in the coming weeks.
If the overall crypto market sentiment improves, the growing network activity could propel the BCH price toward $250. The In/Out of Money Around Price data, which depicts the purchase price distribution of current Bitcoin Cash holders, also confirms the bullish outlook.
It, however, highlights that Bitcoin Cash price will face significant resistance when it reaches the $235 territory.
As shown below, 127,000 addresses had bought 1.17 million BCH at the average price of $236. If the miners pile on more sell pressure, BCH could experience a pullback.
However, if miners slow down the selling of BCH coins, then that resistance level could give way, and the BCH price could smash that resistance to reclaim $250.
Conversely, if the crypto market momentum flips negative, the BCH bears and miners selling off could force a retracement below $200.
However, as shown above, 122,000 addresses had bought 181,000 BCH at the average price of $200. If they HODL, Bitcoin Cash could avoid a prolonged bearish reversal.
But if the bears push past that buy-wall, BCH could finally drop below $190.
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