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).

CME Looks to Double Bitcoin Futures Limit, but Is This Wise?

The Chicago Mercantile Exchange ( CME ) has a new request for its regulator, as it looks to double open position limits on bitcoin futures contracts in the face of significant interest.

Nasdaq reports that the CME has already petitioned its regulatory body, the Commodity Futures Trading Commission (CTFC), asking for an increase from 1000 contracts per spot month to 2000 per investor. Each contract represents five BTC, so essentially, at its peak,  a single investor's total position may edge towards a monumental 10,000 BTC.

This is in direct response to the contract's recent growth which is currently depicting record levels of activity, citing $370 million being traded per day. A spokesperson for the CME noted that the idea to increase limits was proposed on the continued maturity of the market:

Based on the significant growth and acceptance of our financially-settled CME Bitcoin futures markets, as well as our analysis of the underlying bitcoin market.

However, as Nasdaq writes the increase in the upper limit of positions is somewhat superfluous. As of July, the number of open interest contracts reached an all-time high of just 6100; given this, it seems the CME may be future-proofing.

Open to Manipulation?

However, concerns remain about the limit increase, as without them, the potential for manipulation rises; often to the detriment to the underlying asset. Although, as per the CTFC website, the threat of manipulation from bitcoin futures contracts is "low":

In general, position limits are not needed for markets where the threat of market manipulation is non-existent or very low.

Instead, Nasdaq posited that this might point to a lessening on the CTFC's strict rule of bitcoin; as well as a maturing of the market in general.

Nevertheless, some believe the CME's bitcoin futures contracts do pose a significant threat to the price of BTC; with some suggesting that blatant manipulation continues unchecked within the market.

As reported , there seems to be a correlation between the expiry dates of CME bitcoin futures contracts and a lull in the price point of BTC. In several instances, a significant drop in bitcoin's price has coincided with a closure from the CME. The most recent example of this occurred on Labor Day, September 2, when bitcoin rose an extraordinary 8% shortly after the CME shut.

Crypto analyst, Alex Kruger, highlighted this, noting the large gaps which formed on the CME chart, from the price discrepancy before and after closing.

This has become a pretty accepted practice within the market. Kruger has even gone to the lengths of compiling statistics each time this phenomenon transpired:

On these occasions, bitcoin cited an average 4.6% price discrepancy following the close of the CME.

Whether this is a coincidence or the market is indeed being actively manipulated is as yet unclear. Either way, with the increase of these limits it might be only a matter of time until we know for sure.

Featured Image Credit: Photo via Pixabay.com