- Bitcoin Cash price continued slipping this week.
- It has formed a falling wedge pattern on the daily chart.
Bitcoin Cash price continued its bearish trend on Friday as cryptocurrencies recoiled. It dropped to a low of $102, which was much lower than where it started the year at. BCH’s market cap has crashed to about $2 billion and its ranking plummeted to 30. At its peak, it was a top ten cryptocurrency.
Why is BCH crashing?
Bitcoin Cash is a cryptocurrency that emerged from a hard fork of the main Bitcoin in 2017. As such, it has similar features like Bitcoin. For example, it was created to help people move money internationally and pay for products.
There are several reasons why BCH has crashed by more than 70% this year. First, on-chain data shows that the number of activities in the network has been in a strong downward trend in the past few months. For example, the number of BCH transactions has dropped sharply while active wallets has also plunged.
Second, macro factors have also contributed to its crash. For example, most central banks have announced a series of interest rate hikes in their struggle to contain inflation. In the United States, the Federal Reserve has hiked rates by 300 basis points and analysts anticipate another 125 basis point increase.
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The same trend has happened in other places like in the UK, Australia, Canada, and the European Union. Historically, risky assets like Bitcoin Cash and stocks tend to struggle in a period when central banks are hiking interest rates.
Third, global risks have kept rising in the past few months. The war in Ukraine is continuing even as Biden and Putin warn about a nuclear armageddon. At the same time, there are concerns about the UK economy following the exit of Liz Truss. Historically, cryptocurrencies tend to underperform in such market conditions.
Bitcoin Cash price prediction
The daily chart shows that the BCH price has been in a strong bearish trend in the past few months. As a result, the coin has crashed below all moving averages, which is a sign that bears are in control. The closely watched Relative Strength Index (RSI) has continued slipping and is nearing the oversold level.
A closer look shows that the coin has formed a falling wedge pattern that is shown in green. Historically, this pattern is usually a bullish sign. Therefore, as it nears its confluence level, there is a likelihood that it will have a bullish comeback. If this happens, the next key level to watch will be at $120.
