Overnight, Bitcoin Cash became the third largest cryptocurrency by market cap. Reaching a high of close to $800, traders are in disbelief at the rapid price rise. Why is Bitcoin Cash’s price so high? Is this just a bubble that is waiting to burst, or will Bitcoin cash overtake its predecessor?
Initially, after the fork first occurred Bitcoin cash was trading at a steady $250. As soon as the fork commenced and the network split gracefully, exchanges started adding Bitcoin Cash trading pairs. As with any cryptocurrency, the more exchanges add it the higher the price rises. BCH was no different, when Kraken and Bittrex added the asset, the price spiked and doubled to $433.
The fire was already burning when Bitfinex finally integrated BCH, ultimately pouring a gallon of fuel into the pit. The explosion propelled Bitcoin Cash’s price to over $700 doubling the asset once again. As great as all this sounds, when something is too good to be true, it usually is.
While it is possible to trade Bitcoin Cash that was credited by exchanges, it is still impossible to deposit BCH to an exchange in order to sell it for Bitcoin or any other currency. For example, even though Bittrex is leading the market with the highest trading volume, the Bitcoin Cash wallet is “under maintenance” and it is impossible to deposit any coins into it.
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This means that even though the total circulation of Bitcoin Cash is around 16 million tokens, the effective supply is much much smaller than that. Moreover, once the exchanges open up their wallets, it is inevitable that users will flood it with Bitcoin Cash to sell. It would be smart to keep an eye on when exchanges, especially Bittrex, enable Bitcoin Cash deposits as that could be a pivotal point in the market.
Another important decision that will influence BCH’s price is how Coinbase will handle the situation of whether or not to credit their users with BCC. Bittrex had no issue crediting the new coin to its users at a 1:1 rate but Coinbase is claiming that will create issues with their hot and cold storage.