Bitcoin Cash is overhyped, but here are some ways traders can manage risk
- Post by: Irjar Jira
- July 25, 2022
- Comments off
Bitcoin Cash has risen more than 30% since its low point this year, and is now almost in overbought territory. BCH enthusiasts who are worried about missing the boat have a chance to catch it.
Bullish relief might have brought some relief to bears. Zooming in reveals that the recent upside is quite small compared to BCH’s extent of downside.
Bitcoin Cash requires at least a 10x movement to return within its old all-time high range (ATH).
Alt is trading at a lower level than its January 2020, levels. This shows the extent of the alt’s sell-off. This also shows why BCH remains oversold.
This simply means that investors still have an opportunity to secure a healthy entry point during the next bullish phase.
This might be a good thing for long-term HODLers but it is less favorable for traders.
Bitcoin Cash’s short term outlook
BCH’s $130.6 price at press time for 24 June is still well below the next resistance zone.
It has however experienced more friction since crossing above the 50-day average.
Source: TradingView
BCH displayed signs of a selloff from 20 June towards 23 Juni and this was supported by some outflows, according to the MFI.
It continues to be inclined towards the upside, but the on-chain metrics suggest that whales may be anticipating a cooling off, particularly after the recent rally.
It is important to note that BCH has not been oversold. There is still a possibility that BCH could rally.
Some metrics of Bitcoin Cash already point to a possible downside. The supply of whales has dropped significantly over the past 30 days.
Nevertheless, the MVRV ratio climbed. It was at its highest point at press time. Many traders who bought the dip are now in profit.
Source: Santiment
The bulls are supported by strong retail demand, which explains the price rise despite outflows from whales.
Retail buying pressure may not be able to withstand long without the support of larger addresses.
Additionally, 24-hour whale transaction activity has declined significantly and active addresses have decreased in the past four days.
Source: Santiment
Whales are not known for buying higher so they will wait for a price drop before purchasing at a more attractive entry point.
This assumes that retail volume will run out of steam. However, many buyers in this segment may be long-term investors and raise the floor price.
There are always ups as well as downs. The chances of FUD pushing to wipe out some of the gains are high.
Michael is a journalist full-time at AMBCrypto. Michael has five years experience in finance and forex, and more than two decades as a writer in crypto and blockchain segments. AMBCrypto’s writing focuses primarily on technical analysis and news about cryptocurrency markets.
His passions include exotic cars and motorcycles.
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