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Is Bitcoin Cash Overbought?

BTC

Bitcoin Cash has been soaring for a week, bringing it into bull territory with a hard fork coming up on May 15—but it may already be overbought, or it may be the victory lap of the ‘real’ bitcoin.

Last week, Bitcoin Cash (BCH)—the fourth-largest cryptocurrency by market capitalization--gained 80 percent before paring some of those gains slightly, along with other crypto coins.

BCH gained nearly 12 percent today by mid-afternoon trading, reaching a market cap of almost $23.67 billion.

(Click to enlarge)

 Source: Coinmarketcap

Right now, it’s all about the ‘hard fork’ for Bitcoin Cash, itself the product of a Bitcoin hard fork. A hard fork is when the digital currency splits in two, spinning out another currency from the underlying code.

What this does is increase the processing power of bitcoin cash because it expands the size of the blocks of transactions processed—in this case the block size will go from 8MB to 32 MB. 

But what’s different this time is that there might not end up being an extra coin. This time, the hard fork might produce a new coin—Bitcoin ABC (Adjustable Blocksize Cap)--that simply replaces BCH.

That possibility has done nothing to degrade the price of Bitcoin Cash, though, because sentiment has it that a hard fork means higher prices.

And it’s not just the prospect of the hard fork that’s boosting prices. According to Bloomberg, one of the largest mining pools for BCH, Antpool, is “burning” up its coins and reducing the supply, thus driving up prices.

Crypto hedge fund Multicoin Capital told Bloomberg that Antpool is playing a PR game to make it look like they’re reducing supply to control the news flow and push prices up.

(Click to enlarge)

Whether it’s the hard fork or Antpool’s PR games, what some are concerned about now is whether BCH is overbought and might start pulling back and paring gains.

Related: Bitcoin’s Breakout Is Not As Bullish As it Seems

Once investors realize the hard fork is only a software upgrade, they rally may well run out of steam, according to CoinDesk, which offers technical charts intended to show the rally doesn’t have legs:

(Click to enlarge)

Hard forks haven’t always been that great for investors.

There have been three Bitcoin forks so far, one creating Bitcoin Cash in August 2017, a second creating Bitcoin Gold (BTG) in October 2017, and the last creating Bitcoin Private (BTCP) in February 2018.

(Click to enlarge)

No one really pays attention to Bitcoin Private, and Bitcoin Gold is also pretty obscure, as is Litecoin Cash, created in the Litecoin hard fork. 

And the next fork on May 15 isn’t another Bitcoin fork—it’s a double fork, or a fork of a fork and the point is to speed up transactions, which is the main problem for cryptocurrencies.

But maybe it’s not the fork at all, nor even Antpool shenanigans: Some think Bitcoin Cash is the true cryptocurrency, and the digital token kingmaker, because it creates a currency that is more scalable into a medium of exchange rather than just something you trade or invest in.

By Jan Bauer for Safehaven.com 

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