Bitcoin Cash recently posted a sharp double-digit price gain, propelled by record trading volume as investors increasingly eye alternative cryptocurrencies, though some analysts warn of potential overbought conditions.
The cryptocurrency climbed 10.26% in a single day, reaching a price of $557.43, marking its market capitalization at $11.11 billion. This significant rally was underpinned by a 53% surge in daily trading volume, far exceeding its 30-day average.
The strong performance contrasts with the relative stability of Bitcoin, which held steady around $112,000, suggesting a broader rotation of capital into altcoins.
Despite the strong bullish momentum, technical indicators like the Relative Strength Index (RSI) at 65.5 suggest the asset is approaching overbought territory, typically signaled above 70. This indicates sustained buying pressure but also hints at potential consolidation ahead.
Market observers point to a 12% increase in open interest for BCH perpetual futures, signaling growing bullish bets from large institutional investors. Funding rates in perpetual contracts have also turned positive at 0.015%, indicating long positions are currently dominating the market.
On-chain data further supports the rally, with daily transactions rising 18% to 350,000. This increase is primarily driven by its use in peer-to-peer payment applications, bolstering its utility as a scalable payment option. The number of active holders has also grown by 5%, reaching 1.2 million, indicating rising retail confidence.
Analysts are eyeing key resistance levels at $580, a psychological barrier, and $620, which aligns with a 161.8% Fibonacci extension from a recent dip. Immediate support levels are identified at $540 and the previous closing price of $510, with a break below $510 potentially invalidating the current upward trend.
The Moving Average Convergence Divergence (MACD) has crossed above its signal line, with its histogram expanding, reinforcing the bullish acceleration. However, the asset’s proximity to its 50-day Simple Moving Average (SMA-50) at $558.53 could lead to short-term consolidation.
The surge in BCH’s implied volatility, which climbed to 65%, anticipates significant price swings. This heightened volatility makes robust risk management crucial for investors. While BCH’s correlation with the S&P 500 suggests potential upside in a rising equity market, macroeconomic factors like U.S. consumer price index data could introduce volatility and potentially reverse the rally.
For short-term traders, the consensus suggests buying on dips between $540 and $550, with a strict stop-loss order set at $510 to limit potential losses. Medium-term strategies recommend accumulating the asset if it sustains above its 30-day Simple Moving Average at $537.81, targeting $620. Long-term investors may consider holding BCH as an inflation hedge, given its fixed supply.