BCH price forms falling wedge: Safe to buy?
BCH price forms falling wedge: Safe to buy?
The Blockchain Industry: A Comprehensive Overview
The blockchain industry has witnessed significant fluctuations in recent weeks, impacting the price movements of various cryptocurrencies including Bitcoin Cash (BCH). As the momentum in the crypto industry waned, BCH dropped to a low of $240 on Wednesday, representing a decline of more than 27% from its year-to-date high of $3291.
Fed Interest Rate Decision Ahead
The recent downward trend in Bitcoin Cash price aligns with the performance of other major cryptocurrencies like Bitcoin, Ethereum, and Litecoin. Looking ahead, the next likely catalyst for BCH and the wider crypto market will be the upcoming interest rate decision by the Federal Reserve2.
Economists anticipate that the Federal Reserve will opt for a 0.25% interest rate hike in its decision. However, it is expected to signal that this hike will be the final one for this year, given that inflation is declining at a faster pace than anticipated3.
The American consumer price index (CPI) data released earlier this month revealed a drop in inflation from 4.1% in May to 3% in June. This downward trend in inflation, which peaked at 9.1% in 2021, suggests that another bearish rate hike may actually be positive for cryptocurrencies4.
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Meanwhile, data from Coinglass indicates a decrease of over 1.45% in open interest in the BCH futures market over the past 24 hours. The total open interest now stands at $317 million, with Binance, OKX, Bybit, Bitget, and dYdX accounting for the major share. Binance leads with over $167 million, followed by OKX with $58.9 million5.
The graph below illustrates the decline in Bitcoin Cash’s open interest from its peak of over $541 million, which occurred during the Ripple vs SEC lawsuit, to its current level of $317 million6:
Bitcoin Cash Price Prediction
Analyzing the 4-hour chart, it becomes evident that the BCH price has recently been in a prominent bearish trend. It has dropped below the 25-period and 50-period moving averages. However, upon closer inspection, it is observed that the coin has formed a falling wedge pattern, which often indicates a bullish signal7.
Furthermore, this pattern appears to approach the confluence level, indicating the possibility of a bullish breakout. If this breakout occurs, the next significant level to monitor would be $280. Conversely, if the support at $220 is breached, it would invalidate the bullish view8.
In conclusion, the blockchain industry, including cryptocurrencies like Bitcoin Cash, is subject to a multitude of factors such as interest rate decisions by central banks. As the Federal Reserve prepares for its interest rate decision, all eyes will be on the potential impact it may have on the crypto market. Traders and investors alike will closely monitor the open interest in BCH futures, while technical analysts will be looking for the expected bullish breakout signaled by the falling wedge pattern9. The blockchain industry, with its inherent volatility and potential for substantial returns, will continue to captivate both industry participants and observers as it evolves and shapes the future of finance.
