According to onchain data, sustained interest in using the Bitcoin Cash network and increased transaction activity kept the BCH price above the $200 level for two consecutive months. Recently, however, long-term holders have continued to lock in profits. Here’s what investors can expect if the token loses the critical $230 support level.
Here’s what investors can expect if the token loses its critical $230 support level.
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Long-term BCH holders continue to cash out of the coin
Bitcoin Cash is attracting enough fundamental network demand to support an ongoing rally that has seen the token price surpass the $320 mark in late June. However, onchain data shows that long-term investors continue to withdraw capital from Bitcoin Cash, driving down the price of BCH.
The profit-taking trend among bears is still intact by mid-August. As you can see from the chart below, this week the BCH network saw another significant jump in the Age consumed indicator, which reflects the age of the coins being moved around. Traditionally, an increase in this value suggests that long-term network participants are selling the asset. Conversely, a sustained decline in the Age Consumed metric could mean that long-term hodlers are confident the coin will appreciate.
Another way to look at the coin is that it’s going to rise in value.
The metric approached the 3 million mark on Aug. 14, surpassing the previous two days combined.
Bitcoin Cash (BCH) and onchain metric Age Consumed. Source: Santiment
If this trend continues, it could prevent BCH bulls from launching a significant price recovery.
Momentum remains mostly neutral
Bitcoin Cash continues to attract steady demand after reaching euphoric price highs in June. The RSI relative strength index also confirms this. It shows that BCH’s price momentum remains largely neutral despite bearish pressure from long-term investors taking profits.
As shown in the chart below, the daily RSI has been holding in the neutral zone around 45 since the beginning of August.
Bitcoin Cash (BCH) and the RSI Index. Source: CryptoWaves
Reminder, values of 70 and 30 are considered critical extreme values of RSI. If it is around 45, as in this case, it indicates that current price movements are relatively balanced.
Obviously, while long-term investors are selling, other strategic participants in the BCH network are buying up the asset, creating new demand.
The price of Bitcoin Cash is thus likely to hold above the $200 support level at the current state of affairs.
At the current state of affairs, the price of Bitcoin Cash is likely to hold above the $200 support level.
BCH outlook: consolidation above $200 ahead of a potential rally
While the cryptocurrency market awaits another industry-wide rally, the price of BCH is likely to consolidate above the $200 support level.
The BCH price is likely to consolidate above the $200 support level.
In/Out of Money Around Price (IOMAP) data showing the purchase price distribution of current holders also supports this bullish outlook.
The chart below shows that 39,000 addresses purchased 1.41 million BCH tokens at an average price of $217.51. This cluster of holders forms the most significant barrier. If this support level falls, the next wall of buying around $205 could still prevent BCH from falling below $200.
And if this support level falls, the next wall of buying around $205 could still prevent BCH from falling below $200.
Bitcoin Cash (BCH) and IOMAP data. Source: IntoTheBlock
But if momentum turns positive, BCH bulls could launch a recovery towards the $280 area. In that case, the 164,000 addresses that bought 1.31 million coins at an average price of $240 could trigger a pullback.
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But if this resistance is broken, Bitcoin Cash could successfully recover above $300.