Bitcoin Cash is a peer-to-peer form of payment with a larger block size than Bitcoin. This larger block size helps to make the chain less congested, giving it fast and cheap transactions in the process. Bitcoin Cash was hard forked from Bitcoin in 2017.
Along with the larger block size, Bitcoin Cash also made its chain smart-contract compatible, enabling decentralized applications to be built on top of the chain. A majority of the features remain the same as Bitcoin’s, including a hard cap of 21 million coins and a proof-of-work (PoW) consensus method.
The code underlying Bitcoin was modified by a group of developers in 2017, which forked the chain into Bitcoin Cash; its coin BCH closely follows the price movement of Bitcoin. The idea to make Bitcoin easier to transact is honorable, but its gold-like store of value and security may have been compromised in the process.
Why is Bitcoin Cash Down?
The entire crypto market is down following an 8.6% CPI spike this past week. The consumer price index spike was much higher than expected and came during a Fed tightening cycle, making it very bearish for markets. This inflation spike has disproved the narrative that inflation is transitory.
Investors are rushing to liquidity, crushing the stock and crypto markets. Fear of stronger moves by the Fed to tame inflation has impacted markets around the world. The Fed will meet this June to discuss further action. The expected 50 BPS hike could turn into a stronger move, perhaps as much as 75 BPS. Also important will be Fed Chair Jerome Powell’s tone on inflation. If Powell sounds too heavy-handed, it could result in increased pain for the markets.
Bear markets tend to last just under a year, or roughly 10 months. Accumulating great positions when assets are cheap is how many build wealth. Buying when others are fearful has been a strategy used by many great investors; with few wanting to touch risk-on assets, it may be time to start accumulating. Whether Bitcoin Cash is the correct risk-on asset for you is a decision you must make.
Bitcoin Cash Price Movements
Bitcoin Cash (BCH) has not received much hype lately. With market conditions worsening, its value dropped in 2022 from over $390 per coin to just over $130 per coin. Bitcoin has had a rough year as well, dropping in price from $47,000 to $25,000.
If this market stays bearish, Bitcoin Cash is a name that will likely get crushed. A coin with few developers, use-cases or any true value outside of speculative investing is bound for a turbulent ride when liquidity in a market dries up.
Bear markets in which coins lost up to 99% of value yet came back stronger in the following bull market have occurred. Even if Bitcoin Cash were to lose a majority of value, you have to hesitate before ruling it dead.
Cryptocurrency Market Cycle
The market cycle appears to be heading into a crypto winter. Bitcoin and other altcoins are crashing, stablecoins are failing and investor sentiment is low. All signs point towards a bear market, but this time could be exciting for crypto investors. Money is made in bear markets and realized in bull markets.
Along with great buying opportunities, investor see the crypto market with increased clarity. When the market is pumping, it is much more difficult to understand which crypto projects hold true value. When everything tightens, values realign.
The technology underlying these cryptocurrencies has not changed; market conditions and consumer sentiment have. Keeping a level head is important, and making emotional trades is rarely a good strategy. By following a dollar-cost-averaging strategy, you can help to eliminate emotional trading. This practice can reduce panic selling and keep you from overextending yourself at these attractive new prices.
Where to Buy Bitcoin Cash
Bitcoin Cash is available for purchase on a number of trading platforms, most notably Coinbase Global Inc. (NASDAQ: COIN). Another option is to use a decentralized exchange (DEX). To use a DEX, a non-custodial wallet is needed. Some leading non-custodial wallets include MetaMask and Coinbase wallet (different from its trading platform.)
So, is Bitcoin Cash Dead?
Bitcoin Cash may not survive this market sell-off. Historically, a long list of coins don’t survive bear markets. With few bull cases, Bitcoin Cash could potentially join the long list of dead coins. If markets reverse, Bitcoin Cash will likely rise with Bitcoin. However, if this is a prolonged crypto winter, there is no telling whether Bitcoin Cash will ever return to its all-time highs.