Is it advisable to invest in Bitcoin Cash [BCH] following its positive performance in mid-October? A significant price increase in a short period is often seen as large investors accumulating assets. BCH demonstrated such a move about a week ago, but has since struggled to maintain the same positive momentum.
Bitcoin Cash has been gradually moving away from its recent low point in August, showing signs of recovery from its previous decline. The price surge on October 14th was expected to reignite interest in the cryptocurrency.
However, since then, Bitcoin Cash has faced challenges in sustaining further gains, suggesting a decrease in demand. Despite this, the selling pressure has been limited, allowing Bitcoin Cash to hold on to most of its gains from mid-October. The current price of the cryptocurrency stands at $258.6.
The lack of strong selling pressure could mean that major investors who bought in during the mid-month surge have not yet sold their holdings. While this indicates that positive expectations are still present, it does not guarantee a continuous upward trend for BCH.
So, what do the on-chain metrics reveal?
Insufficient Evidence of Substantial Bitcoin Cash Accumulation?
Data on ownership shows a slight increase in HODLer addresses since mid-October. The number of holder addresses has risen from 24.34 million on September 24th to 24.39 million addresses.
The number of short-term holders has significantly decreased from 653,710 addresses on September 22nd to 618,460 addresses. Additionally, traders have fallen from 107,640 addresses to 94,820 addresses during the same interval.
An analysis of address data suggests a shift towards longer-term investment, indicated by the decline in addresses. However, following the mid-month rally, hodler balances have decreased from 11.94 million BCH to 11.93 BCH, pointing to some profit-taking.
On the other hand, cruiser balances have increased during this period, rising from 6.75 million BCH to 6.8 million BCH. Meanwhile, trader balances have dropped from 1.11 million BCH to 1.07 million BCH according to the latest data.
These observations do not decisively prove substantial accumulation activity.
The recent uptick in bullish activity in the middle of the month could have been an attempt to stimulate interest. As a result, Bitcoin Cash has recently recorded its highest transaction volume since mid-August.
The number of transactions surged from around 13,000 TXs on October 20th to over 368,000 transactions on October 21st. Whether this spike in transactions is linked to the mid-month price surge remains unclear.
Nonetheless, this notable increase in transaction volume may instill greater confidence among investors.