BCH Price Analysis And A SHOCKING Comparison

Ignoring the overall market decline and negative sentiment that reminded us of the previous bear market, there is a short-term indicator we should not overlook.

We examine the relation of BCH daily transactions with the market cap changes of another network (Litecoin) performing similar tasks (payments).

While the functionality of blockchains as P2P Electronic Cash and the features of each network should primarily concern investors, still centralized Ethereum clones received the most attention, concentrating an enormous portion of the 2021 influx of investors. 

Nonetheless, in 2021, cryptocurrencies offering payment features also managed to break out long-term resistance. Bitcoin Cash with proper fundamentals backing it underwent a decent price rally, which abruptly ended though with an extreme price decline that led many to wonder who sold so much and crashed the BCH price.

Well, it seems that nobody sold, at least not massively as the chart makes it seem, but there is something else going on in this market.

2022 - Bitcoin Cash vs DogeCoin & Litecoin (Transactions and MarketCap)

The comparison presents results when observing the pairs according to their market cap and their position in the market.

BCH Daily Transactions vs LTC and Doge (Last 6 Months)

The first chart gives us BCH transactions together with LTC and Doge since the beginning of the year using the weighted average (30-day avg. period).

Litecoin (blue) records more transactions than Bitcoin Cash since July 2021 (the chart starts from December 2021). In a zoomed-out chart, we discover Litecoin somehow started increasing transactions in 2020, while in fact, the community keeps shrinking, no adoption takes place, and even considering hype levels, nothing is moving for Litecoin.

With Litecoin, we haven't witnessed any adoption near to what Bitcoin Cash is producing with all the initiatives and merchants accepting it. Litecoin doesn't have a network of merchants and doesn't even maintain a map of merchants accepting it. The LTC transactions are mostly exchange transactions (like BTCs) and not even close to the adoption levels Bitcoin Cash experiences.

Although, not going to enter the rabbit hole the Blockstream devs went and claimed transactions did not happen.

The transactions are onchain, and perhaps Bitcoin Cash can also increase adoption and transactions, especially since Bitcoin Cash fees are lower than Litecoin's.

Dogecoin in this chart is the typical Dogecoin. Its transactions are based on Musk's tweets and have no other purpose. The fact that Dogecoin is mined together with Litecoin perhaps is not worth mentioning at all.

Considering mining between LTC/Doge and BCH, hash rate can't provide absolute comparisons of network strength or security since Litecoin uses Scrypt for proof-of-work, which demands different types of ASIC equipment from Bitcoin (Cash or BTC), which has a higher cost than the SHA256 ASIC devices.

Market Cap Comparison

Dogecoin is the least used network among the three, yet it still manages to sustain double the combined total market cap of both Bitcoin Cash and LTC.

The Musk effect severely distorted this market since Doge reached an extreme valuation of approximately $0,70 in 2021, based on an unreasonable hype still sustained by the richest man in the world.

Meanwhile, Bitcoin Cash has fiercely dropped and keeps losing positions in the market cap indexes.

However, Litecoin is not in an entirely better position. Both cryptocurrencies shared a similar price action throughout 2021, yet, there was a few months that BCH experienced the noise.cash effect, which contributed (with a few more factors) to temporary parabolic price action for BCH.

2021 At The Market Peak

Leaving Dogecoin aside, though, and examining the patterns of BCH and LTC during 2021 we observe a bizarre situation.

While BCH transactions exploded in the first five months of 2021 and Litecoin's daily transactions remained at way lower levels, the price comparison that followed was inconsistent with the network effects of these networks.

The daily number of transactions in Litecoin and Bitcoin Cash networks:

Bitcoin Cash transactions abruptly dropped on May 2021 as noise.cash changed the transactional system from streaming to batching.

The price of Bitcoin Cash followed the rise of transactions and users (network effect) throughout the first months of 2021, and perhaps a few more events in the market that supported this temporary bullish cash.

Although, as we observe from the price action of BCH and LTC in 2021 (daily raw values), the price of LTC followed Bitcoin Cash with a complete correlation:

The two patterns seem identical, proving trading algorithms are abusing this market without considering fundamental differences, adoption rates, network effect, communities, developments, or anything else.

This chart is not a revelation or an eye-opener but the result of trading algorithms and market manipulation.

For a long time we observe Litecoin evaluated equivalent to Bitcoin Cash, and everyone is still wondering what exactly happens here.

Not Convincing Enough?

If you are not convinced yet, here is the chart of the market cap pattern Bitcoin Cash and Litecoin follow, which is absolutely SHOCKING.

Bitcoin Cash transactions in 2021 were quickly rising, while LTC transactions were rising at a much lower rate.

Considering this stat that explained a vast difference in network effect, the price growth of LTC pegged to BCH was unrealistic and a result of manipulation practices by exchanges.

Exchanges and a few long-standing BTC whales create these patterns to trade, extract the most value, and keep suppressing BCH in the market.

LTC was cutting part of Bitcoin Cash price growth during 2021.

It became clear as it followed the Bitcoin Cash pattern without significant adoption or events that justified its price action.

FTX, Binance, Bitfinex, Kraken, Coinbase, and any other exchange, are all behind this manipulation, with Tether facilitating the trading algorithms and the fractional reserves model of exchanges and custodian platforms.

Interest is rising in BCH, transactions are rising, and Litecoin miraculously also profits from this.

Yet, it never works the other way around since Litecoin has nothing to present except a bunch of price speculation shills.

Litecoin doesn't provide use cases or adoption. It is just a pump and dump group operated by a single team, with Charlie Lee serving the maximalist agenda.

We can draw plenty of conclusions from this price action, which I also recall having observed when examining the price action of multiple cryptocurrencies during the 2017 and 2021 market peaks.

Consider what happened in 2021, and question again who dumped BCH in 2021 and if this was actual BCH (whales) or something completely different happened. 

Conclusion

The fact that Bitcoin Cash produced a vast network effect and challenged (for the second time) the status quo (even temporarily) is an omen explaining what we should expect in the following years.

Adoption has two fronts:

A) The real-life application with merchants and businesses adopting Bitcoin Cash in physical locations, and the digital economy (besides e-commerce with e-shops).

B) The second one is the digital front and Noise.cash proved it can be a game-changer. Bitcoin Cash works towards online microtransactions with a robust network offering instant transactions and fees lower than a penny, but also on Web3 applications with SmartBCH. SmartBCH enhances the network effect and presents a better alternative to Polygon, Solana, and the rest Ethereum clones.

Bitcoin Cash, smartBCH, and onchain features have similar odds of succeeding and can remove the unpleasant market manipulation.

• Cover Photo by " geralt ", on Pixabay

• Charts by Bitinfocharts

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