Why investors need Bitcoin Cash and why the coin doubled in a week
The price of the cryptocurrency Bitcoin Cash doubled after appearing on the exchange for institutional investors EDX
Experts talked about the reasons behind the growth of the most famous "fork" Bitcoin and its prospects as an asset for big investors
The cryptocurrency Bitcoin Cash (BCH) reacted with a sharp jump to the news of the launch of the crypto exchange for institutional investors EDX Markets and doubled in less than a week.
The cryptocurrency began to rise in value after news of the launch in the U.S. of the cryptocurrency exchange for institutional investors EDX Markets, which was supported by large financial companies such as Citadel Securities, Fidelity Digital Assets, and Charles Schwab. The new exchange offers trading in four cryptocurrencies, including Bitcoin Cash (BCH). The other three assets on EDX were Bitcoin, Ethereum (ETH), and Litecoin (LTC). A week before, BlackRock also applied for an exchange-traded fund (ETF) for Bitcoin, which also added to the market's optimism.
219,49 +27,37 (14,24%)
At the time of publication, Bitcoin Cash is at $220 in a trading pair with Stablecoin USDT on the Binance exchange. The coin ranks 19th on CoinMarketCap with a market capitalization of about $4.3 billion. Bitcoin's capitalization exceeds $589 billion, the first cryptocurrency accounts for more than half of the total capitalization of the entire cryptocurrency market. Bitcoin is at $30,000, down slightly from last week's yearly high. LTC is up about 12% since the launch of EDX and ETH is up 7%.
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The Bitcoin Cash cryptocurrency emerged in 2017 as a modified copy (fork) of Bitcoin itself with an increased transaction block size. This approach made payments in BCH faster and cheaper compared to the "original" Bitcoin but did not solve a number of other technical problems, including the lack of support from interested professional developers. Proponents of the Bitcoin Cash promotion, most famously Roger Wehr, have positioned it specifically as a currency for everyday payments as opposed to Bitcoin as a store of value.
"Low Base Effect."
"In this regard, BCH had a low-base effect, when one positive factor was enough for the price to take off, and the participants, who played to the downside, were liquidated. In fact, the price increase was due to the liquidations," Pershikov explains, commenting on the growth of the cryptocurrency.
The second important factor, in his opinion, was the fact that BCH appeared as an asset on the EDX Markets exchange. The choice of the asset is understandable because it has almost no risk of being recognized as a security, which means it can be traded without the risk of encountering the actions of regulators, Pershikov said. Thus, U.S. investors "saw this as a signal to buy the asset," which could eventually become a legally traded cryptocurrency in the U.S.
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"Bitcoin is the undisputed leader among institutional investors," co-founder of the ENCRY Foundation Roman Nekrasov reasoned. - But it so happened that BCH, LTC, and ETH as old-timers of the crypto market also enjoy a certain popularity among them. The main reason, in my opinion, is that these coins have already proved their viability, and secondly, they are not likely to be classified as securities. For institutionalists who manage not only their own money but above all other people's money, this is a large and significant factor when making investment decisions."
In early June, the U.S. Securities and Exchange Commission (SEC) filed lawsuits against two of the world's largest cryptocurrency exchanges, Binance and Coinbase. The regulator is making a number of allegations against both, the main one being that a number of cryptocurrency assets traded on the platforms are recognized as unregistered securities that fall under the regulator's purview.
U.S. regulators have repeatedly said that Bitcoin does not look like security, Nekrasov notes. If both BCH and LTC are forks of Bitcoin, then they are unlikely to be classified as securities, the expert believes. At the same time with ETH "the issue is controversial," he adds, but in recent years the rhetoric of regulators was "rather favorable than repressive" in relation to this cryptocurrency. Now, amid the SEC's lawsuit against Coinbase and the recognition of several large altcoins as securities, investors are doubly vigilant about which cryptocurrencies to invest in.
As with BCH, the other assets, LTC ETH and BTC, "are chosen precisely for their neutrality," Pershikov adds. Only ETH may be of interest to American regulators in terms of its evaluation as a security, the analyst said. But so far, the SEC has not characterized Ethereum in such a way in its assessments, so this asset is "protected in a certain sense."
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