Bitcoin Cash (BCH) Price Prediction: A Drawdown May Be Coming, Here\'s Why

Bitcoin Cash (BCH) price went from $494.30 on June 7 to a low of $314.24 on July 8. However, according to recent data available to BeInCrypto, the decline

The price of Bitcoin Cash (BCH) has been on a roller coaster ride in the past month, with a sharp decline from a high of $494.30 on June 7 to a low of $314.24 on July 8. However, recent data available to BeInCrypto suggests that the downturn may not be over yet.

At press time, BCH trades at 343.09 with bulls eyeing a break past the upper-level resistance. Here’s a look at what on-chain analysis reveals alongside the technical side about the coin’s next move.

Bitcoin Cash HODLers Decamp from Previous Site

One metric indicating a drawdown in BCH’s price is the Dormant Circulation. This metric showcases the amount of coins that were involved in transactions for a period that have not moved. When circulation spikes, it indicates that a lot of old coins are being transacted, while a decline implies that coins have remained largely stagnant.

According to data from Santiment, the BCH 90-Day Dormant Circulation had jumped to 18,200 at the time of this writing, suggesting that many old coins are moving to new wallets.

This movement could be attributed to the recent BCH distribution by the defunct exchange Mt. Gox. In most cases, such a large movement of coins indicates that they are being sent to exchanges, and the aftereffect is usually a notable decline in price.

A rhyming pattern of this potential can be traced to July 5, when dormant coins became active and at that time, Bitcoin Cash traded around $341.62. But two days later, the value had decreased to $300.86. If this pattern repeats itself, BCH’s price may drop by 10% within the next few days.

Beyond coin circulation, another indicator pointing to a price decrease is network activity. According to IntoTheBlock, the number of new and active addresses on Bitcoin Cash’s network have both decreased in the last seven days.

This decline in both new and active addresses highlights the project’s lack of traction and the cryptocurrency’s lack of increased adoption. Furthermore, such a decrease in activity implies a drop in demand for BCH. If sustained, this can drive a notable drop in value.

BCH Price Prediction: A Hurdle Waits in Front

At press time, bulls seem to be defending the $317.08 supporting while eyeing a pump into the resistance at $396.41. However, the On Balance Volume (OBV) shows that it may be challenging to reach the resistance point.

This is because the OBV detects if trading volume is positive or not. If the OBV increases, it means that the trading volume has more buy orders than the coins sold.

If the indicator decreases, it implies a rise in selling volume. This is the situation with BCH. The Parabolic Stop and Reverse (SAR) indicator also supports this.

Typically, if the dotted lines of the Parabolic SAR are below the price, the price can continue to increase. But since they are above it in BCH’s case, the coin’s value is set to drop below $330 in the short term.

However, if bears are not strong enough and bulls reject the move, a bet to the upside may be profitable. If this is the case, BCH’s price can head toward $400.

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