Bitcoin - BTCUSD
The Bitcoin Cash price has been under intense pressure in the past two days. The BCH is trading at $517, which is 17.50% below where it was on Sunday evening. This has brought down its market cap to more than $9.7 billion, making it the 11th biggest digital currency in the world.
What happened: Bitcoin Cash often follows Bitcoin. Indeed, because it is usually cheaper than the main Bitcoin, many traders tend to buy it instead. For one, with $1,000, it is cheaper to buy BCH than BTC.
As such, the Bitcoin Cash price surged on Sunday as the price of Bitcoin soared to an all-time high of $62,000. This happened as investors started to price-in more demand for the digital currency as the Treasury Department started distributing the $1.9 trillion stimulus funds.
India crypto ban: However, the BCH price has declined sharply as investors react to news that India is planning to ban digital currencies. The impending bill will ban mining, trading, sending, and all other transactions dealing with cryptocurrencies. Still, following uproar, there is a possibility that the government will change its stance against the currencies.
The Bitcoin Cash price has also retreated because of profit-taking. In most periods, the price of Bitcoin tends to move sharply lower after reaching a major level of resistance.
On the four-hour chart, we see that the BCH price topped at $775 early this year. It formed a double-top pattern at this level and then crashed by 44% to $430 on February 28. On Sunday, the price rose to $606, which was 40% above the February’s low.
On Sunday, after reaching a high of $606, the price crashed and moved below the ascending channel shown in black. It has also moved below the 25-period and 15-period moving averages that have made a bearish crossover. While it is still early to tell, the price seems to be forming a head and shoulders pattern, which is usually a reversal pattern.
However, the price also seems to be in the fourth wave of Elliot Wave. Therefore, in my view, the Bitcoin Cash price will likely bounce back and rise to about $570 to form the right shoulder. If it moves above the Sunday’s high, the head and shoulders pattern will be invalidated.
