What is BCH/USD?
The BCH/USD pair represents the number of US dollars necessary to purchase one Bitcoin Cash (BCH).
Bitcoin Cash was created in 2017 as a result of a debate within the Bitcoin community concerning the scalability and transaction speed of the Bitcoin network. Developers and miners implemented a hard fork of Bitcoin to increase the block size limit from 1 to 32 MB, enabling more transactions to be processed per block and making Bitcoin Cash a more efficient and cost-effective digital currency.
Bitcoin Cash, like Bitcoin, seeks to uphold decentralisation and financial independence in accordance with the vision of alleged Bitcoin creator Satoshi Nakamoto.
By prioritising on-chain scaling solutions, Bitcoin Cash seeks to be more scalable than Bitcoin. This means that it prioritises expanding the capacity of its blockchain to handle more transactions directly on the main chain, as opposed to relying significantly on off-chain solutions such as the Lightning Network.
Bitcoin Cash is gaining popularity across multiple industries, with increased media coverage highlighting its potential as a digital payment solution on account of its faster transaction speeds and reduced transaction fees. Consequently, BCH enjoys widespread acceptance among businesses and merchants globally. The ease of conducting day-to-day financial transactions with Bitcoin Cash is further facilitated by e-payment services and the availability of debit cards issued by cryptocurrency exchanges.
BCH/USD historical performance
Bitcoin Cash, like Bitcoin, has experienced periods of volatility and market cycles. Its initial value was established following the Bitcoin fork in 2017, and while it experienced a significant surge at the time, it has since undergone multiple market cycles. After reaching an all-time high of more than $4,300, it peaked near $1,600 during the last cycle of 2021. Since then, it has suffered greater losses than Bitcoin (BTC), losing nearly 95% of its value and frequently finding support below $100.
What affects the price of BCH/USD?
Similar to BTC/USD, the price of BCH/USD is volatile and influenced by several factors:
Firstly, as is the case for Bitcoin, the limited supply of 21 million coins makes the price susceptible to scarcity-influenced dynamics. Bitcoin Cash also undergoes a “halving” process approximately every four years, where the reward for mining new blocks is halved. This effectively reduces the rate at which new BCH enters circulation, further contributing to its scarcity.
Positive news, such as a major financial institution announcing support for Bitcoin Cash, a government recognising it as a legitimate form of currency, or an endorsement from prominent figures, can lead to a surge in investor confidence and a subsequent increase in price. On the other hand, negative news such as a high-profile hack or a regulatory crackdown on cryptocurrency can cause panic among investors, resulting in a decrease in price.
Regulatory developments and legal frameworks regarding the use and trading of BCH can promote confidence and stability, whereas stringent regulations can cause uncertainty and price volatility.
Increased adoption by individuals and businesses can drive up demand and BCH prices, while negative news can have the opposite effect. For example, if a major retailer announces that it will start accepting Bitcoin Cash as a form of payment, this can lead to increased adoption and a surge in demand. On the other hand, if there are reports of security breaches or fraudulent activities involving Bitcoin Cash, it can erode trust and negatively impact its price.
Finally, technological advancements, such as integrations with payment processors and merchants or simplified wallet designs, can enhance functionality and affect the perception of the value of BCH.
What to watch out for when trading BCH/USD?
Traders interested in BCH/USD should keep an eye on various announcements and organisations that can potentially influence its price. Here are a few key ones to consider:
- Bitcoin Cash development teams, including Bitcoin ABC, Bitcoin Unlimited, and BCHD, are crucial for the ongoing improvement of the protocol.
- Announcements from cryptocurrency exchanges about BCH's listing, delisting, or trading pairs can increase liquidity and attract more traders, potentially driving up demand and prices.
- Statements and regulations from government agencies and financial regulators, particularly those specific to Bitcoin Cash, pertaining to the legal status of crypto, taxation, anti-money laundering (AML) regulations, and know-your-customer (KYC) requirements. Most notably:
- The Securities and Exchange Commission (SEC), which is moving towards regulating the crypto sector by filing lawsuits against companies and exchanges that offer crypto products.
- The Commodity Futures Trading Commission (CFTC), whose mission is to safeguard merchants and investors against fraud and manipulation.
- Updates to the European Commission's Markets in Crypto-Assets Regulation (MiCA) as part of its digital finance strategy.
- News of partnerships between Bitcoin Cash and prominent companies or platforms, which can generate positive sentiment and potentially drive up demand.