Bitcoin Cash price has been under pressure this week. BCH dropped to $505 amid the cryptocurrency rout that happened on Wednesday. This was a 70% decline from the year-to-date high of $1,645. The currency is now trading at $805, which is 61% above the lowest level this week. Its market cap has made a modest recovery to more than $15 billion.
What happened: Bitcoin Cash is a digital currency that many people view as a tracker or alternative to Bitcoin. The two share a long history since BCH came after a hard fork of BTC. Therefore, since BCH is typically cheaper than BTC, many speculators and day traders use it as a proxy for BTC.
Furthermore, while BTC is trading at more than $40,000, BCH is trading at $800. As such, because of limited institutional investors, BCH is usually more volatile than Bitcoin. It is similar to how silver is more volatile than gold.
The BCH price has bounced back from its lowest level on Wednesday because of the fact that BTC staged a recovery. Other cryptocurrencies like Bitcoin, Cardano, and Ethereum have also risen sharply. So, what next?
In my earlier BCH price prediction, I warned that the situation was not looking good for bulls. That was before the crash happened.
The four-hour chart shows that the BCH price has bounced back sharply in the past 24 hours. The currency has managed to clear the important 78.6% Fibonacci retracement level at $747. It has found some resistance slightly below the 61.8% retracement. Also, the price is slightly below the 25-day and 15-day moving average. It also seems to be forming a bullish flag pattern, which is usually a bullish sign.
Therefore, there is a possibility that the currency will resume the upward trend as investors target the 50% retracement level at $1,068. This is about 32% above the current level. For this to happen, bulls will need to move above the 61.8% retracement at $945. On the flip side, a drop below $745 will put this relief rally at risk.
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