Bitcoin Cash: One of the Top Weekly Gainers but What’s Next?

Bitcoin Cash (BCH) emerged as of the few coins in the top 50 by marketcap to maintain an overall uptrend last week. However, fresh data indicates some interesting findings including an accelerating pace of short term profit taking.

Bitcoin Cash just concluded its most bullish week since December. It pulled off an impressive 44.3% uptick from its lowest to highest price point last week.

BCH price surged to a weekly high of $419 which also marked a 55.64% recovery from its lowest price point in February. However, it has since then retraced to a $371.44 price at press time.

BCH’s Money Flow indicator pivoted with a sizable pullback during the weekend indicating mildly aggressive profit-taking. This may offer some insights regarding the cohort of buyers behind last week’s rally.

Is the latest Bitcoin rally a short term passing fad?

The type of buyers behind the rally may aid in determining whether BCH could potentially achieve more recovery down the road. First, there was a surge in whale activity in the first week of March. Whale activity usually fuels significant price moves as was the case in the first week.

Whale inflows at their peak, were more than double the amount of coins flowing out of whale addresses. However, it was notably lower than the level of whale activity observed in the first week of February.

While the whale activity explains why BCH managed to achieve a substantial upside, address balances also revealed some important details. For instance, HODLer balances were up from 11.8 million coins on 1 February to 12.13 million coins as of 8 March.

Cruisers or swing traders who hold from weeks to months were down considerably from 6.6 million coins to 5.59 million coins during the same period.

On the other hand, cruiser balances dropped from 6.6 million to 5.59 million coins. This means swing traders who bought at or near February lows have been taking profits.

Meanwhile, HODLers have likely been buying to take advantage of the sizable discount from December highs. As for the short term traders, the FUD in the market in the last few weeks triggered more uncertainty. As a result, more traders shifted to a short term trading strategy.

What to Expect from BCH Price

All this means the latest wave of profit-taking could potentially be substantial. According to Coinglass, Bitcoin Cash spot flows were in the green in the first week of March.

Spot flows promptly shifted to negative flows during the weekend. About $10 million worth of sell pressure occurred in the spot segment in the last 3 days.

Things were not that much different on the derivatives front. Volume was down considerably compared to the surge in the first week of March. Open interest peaked at $390.58 million on 5 March and has since dipped to $313.82 million as of 9 March.

This decline in volume and open interest confirms profit-taking and a shift towards uncertainty. If this trend prevails this week, then Bitcoin Cash could experience more downside.