The Bitcoin Cash price has crashed to the lowest level since 2020 as demand for the coin eases. It is trading at $288, which is significantly lower than its 2021 high of $1,645. This means that its price has crashed by over 82%, pushing its total market cap to about $5.4 billion. It is now the 28th biggest coin in the world. At its peak, it was among the top ten of the biggest coins in the world.
Why Has BCH Crashed?
There are several reasons that explain the tragic crash of the BCH price. First, the coin’s decline is in line with the performance of most cryptocurrencies. After peaking in May last year, most coins like Ripple and Litecoin have never recovered.
Second, the overall change in monetary policy has also had an impact on most cryptocurrencies. Since the pandemic started, most central banks embraced a significantly dovish tone. They slashed their interest rates to or near zero and then launched the biggest quantitative easing (QE) policies ever.
While most economies have recovered, the Federal Reserve and the European Central Bank (ECB) are still acquiring assets through QE. Still, with labor market tightening and with consumer and producer inflation surging, there is a likelihood that these banks will start tightening. The Bank of England (BOE) has already implemented two rate hikes this year.
Therefore, the Bitcoin Cash price has dropped because of expectations of rate hikes and more tightening. This performance is in line with that of technology stocks, which are usually seen as more risky assets. The BCH price will react to the latest American inflation data scheduled for later today.
At the same time, the close correlation that existed between BTC and BCH has faded. Indeed, the gap between the two has widened. For example, when BTC reached an all-time high in November, BCH was struggling.
Bitcoin Cash Price Prediction
The daily chart shows that the BCH price formed a double-top pattern at about $723 between September and November last year. In price analysis, this pattern is usually a bearish sign. The coin then managed to move below the key support at $387, which was the lowest level in July last year.
It has remained below this support point ever since. Therefore, there is a likelihood that the Bitcoin Cash price will continue falling as bears attempt to move below $300.