Bitcoin Cash Outshines Crypto Market Rally as Avg. BTC Transaction Fees Rise

The cryptocurrency space has been witnessing a major rally in the last few days that helped bitcoin cash (BCH), a cryptocurrency created in August 2017 through a hard fork of bitcoin (BTC), surge nearly 35% in the last 30 days.

Currently, bitcoin is up by about 10.2% in the last 24-hour period, while BCH is up by 17%. This, as network activity on the flagship cryptocurrency’s network started surging. So much so that according to BitInfoCharts, the average transaction fee is currently at about $2.47.

This could be seeing various bitcoin users turn to BCH, which has 32 MB blocks to accommodate cheaper transactions and follows an on-chain scaling roadmap, and as a result cheaper transaction fees. Per the same data source, average transaction fees on the BCH blockchain are of $0.0047.

Presumably as a result, BCH is the best performing cryptocurrency in the last 24 hours. One BCH is currently trading at $363, up from $260 a month ago, according to CryptoCompare data.

Bitcoin Cash's price performance over the last 30 days

It’s worth noting that last month the cryptocurrency also outshined the wider crypto market rally with a 150% rise in 30 days. After crossing the $300 mark, however, it slowed down and soon after started falling once again.

The cryptocurrency’s price growth has seemingly been accompanied by increased adoption, as data shows BCH transactions per day are up significantly since the start of this year. Some have found, however, that a mysterious address that has been active since April 8 could be responsible for nearly half of the network’s transactions.

BCH’s current performance could also be related to its upcoming May 15 hard fork, which will see it implement Schnorr Signatures, which help optimize its blockchain by improving its capacity and SegWit recovery, which will allow BCH users to recover funds accidentally sent to SegWit addresses.

The cryptocurrency has also, earlier this year, launched an “inexpensive and powerful” tokenization system called the Simple Ledger Protocol. It allows users to launch tokens on the BCH network, in a way similar to the one in which tokens are launched on the Ethereum network.

It’s worth pointing out that while BTC’s blocks have stayed at 1 MB, the cryptocurrency’s developers have implemented SegWit and have been developing its layer-two scaling solution, the Lightning Network, which currently has a capacity of over 1,060 bitcoin ($7.8 million).

Bullish Bitcoin Investors Are Ignoring Institutional Bears

Neil Dennis

Bitcoin investors remained positive this week, despite data showing that bearish bets on the futures market had increased during the previous week.

Positioning data on CME Bitcoin futures showed that institutional managers held 14% more short positions in the seven days to Friday, June 21, than in the week before, according to the Commodity Futures Trading Commission (CFTC).

Futures trade allows investors to back an asset's losses as well as gains: short positioning means backing an asset to fall in price over a defined period.  The increase in the CFTC short position data on CME Bitcoin futures, therefore, would indicate growing bearishness by the larger institutional players.

Playing it by the Charts

They may have been playing it by the charts. The previous two tops occured in mid-May when the price of Bitcoin reached a high of $8,352 before falling back nearly $1,000, and then at the very end of May reaching $9,066 before falling back to $7,807.

Bitcoin's price performnace

The chart shows that in the week to June 21, when shorts on CME Bitcoin futures grew, Bitcoin pushed up above $10,000, in a chart pattern that might have led many to believe another pullback was imminent.

This drop, predicted by many institutional investors, never came, however, and private investors continued to back the Bitcoin rally. Indeed, the CFTC report showed that smaller investors continued to hold more long positions - backing the continued rally: investors with fewer than 25 Bitcoin futures contracts showed four times as many long positions than shorts.

Short Covering

This may help explain how the rally of the last couple of weeks gained momentum, as those on the institutional side joined the buying to cover their short positions.

Tanya Abrosimova, analyst for FXStreet, said:

Many experts believe that at this stage Bitcoin is driven by FOMO (fear of missing out), while the market repeats the situation of late 2017.

It is also likely that Facebook's announcement about the lauch of its Libra cryptocurrency caught the institutional shorts on the wrong side of the market. Since the Libra announcement on Tuesday, June 18, Bitcoin has gained more than 30%.

Abrosimova added:

Looking technically, Bitcoin has been growing strongly for eight days in succession, which is the longest period of uninterrupted growth since December 2017. As BTC/USD is trying to take out a new barrier at $12,500. Once it is out of the way, the next bullish target of $13,000 will quickly come into view.