With Bitcoin’s recent correction from $20,000 down to $18,000, Bitcoin Cash (BCH) has rallied, currently valued at over .15 BTC and over $2,700. With uncertainty surrounding Bitcoinincreasing due to launch of CME futures and ever increasingnetwork congestion, investors are flocking to BCH as a hedge against Bitcoin.
Since its inception on August 1 of this year, Bitcoin Cash has maintained an inverse relation to Bitcoin. After touching $20,000 on Sunday, Bitcoin has gone through a gradual decline, currently trading around $17,700. This correction can be attributed to uneasiness surrounding yesterday’s launch of Bitcoin futurestrading on CME, the largest derivatives market in the world.
While this recent volatility is insignificant compared to last week’s trends, when CBOE launched Bitcoin futures, causing price fluctuations of almost 20% throughout the day, Bitcoin supporters and speculators are hedging with other cryptocurrencies in fear of Wall Street manipulation.
Backed by major personalities Roger Ver, Craig Wright, and Jihan Wu, supporters of Bitcoin Cashpoint to Bitcoin’s network congestion, censorship within the community, and method of development as signs that Bitcoin has strayed from Satoshi Nakamoto’s vision, and that Bitcoin Cash is the true coin.
While most are skeptical of the legitimacy behind the BTC fork, savvy investors have traded BCH in anticipation of Bitcoin downtrends, where BCH has historically flourished. This recent run up is no different, and likely will continue only so long as Bitcoin’s downwards movement continue.
In the near future, however, both supporters and skeptics have reason to be concerned about the direction the price of BCH is headed. Over the summer, Coinbase announced that users that who held Bitcoin during the block in which Bitcoin Cash was forked would have access to their funds on January 1, 2018. Just under 7 million BCH have been claimed, and when Coinbaseusers have permission to move their BCH, it’s to be expected that the circulating supply of BCH will increase dramatically. Without a major source of new money to purchase these newly circulated Bitcoin Cash, it is likely that the price will drop drastically.
Because of this, short term BCH buyers are taking massive risks in purchasing Bitcoin Cash now. If they aren’t able to sell out before others do in preparation for Coinbaseusers, they will see significant BTC losses on their current positions.