Bitcoin Cash (BCH) continued its upward trajectory on Friday, extending its gains as investors poured into the cryptocurrency. The price surged to $420, the highest level since February 1, marking an almost 50% increase from its lowest point this month. Optimism surrounding a potential spot BCH ETF appears to be driving the rally.
ETF Speculation Fuels Bitcoin Cash Rally
The prospect of a Bitcoin Cash exchange-traded fund (ETF) has sparked significant interest among traders. Although no official filings for a BCH ETF have been made, market analysts believe the likelihood is growing.
One of the key indicators supporting this theory is the success of the Grayscale Bitcoin Cash Trust, which currently holds over $154 million in assets. The fund’s popularity, despite its high 2.5% annual management fee, signals strong investor demand for a regulated BCH investment vehicle.
Additionally, Bitcoin Cash shares core attributes with Bitcoin. As a proof-of-work (PoW) cryptocurrency with a fixed supply cap of 21 million coins, BCH aligns closely with Bitcoin’s economic model. With 19.81 million BCH already mined, only 1.17 million remain to be discovered, further tightening supply.
The SEC’s prior approval of several spot Bitcoin ETFs, now managing over $40 billion in assets, has raised hopes that BCH could follow suit. Market watchers also speculate that a spot Litecoin ETF may be on the horizon, which would bolster BCH’s case for regulatory approval.
Technical Indicators Point to Further Gains
Bitcoin Cash’s price movement indicates strong bullish momentum. After finding support at $272.82 earlier this month, the cryptocurrency has rebounded significantly. Notably, the $272.82 level has acted as a critical support zone, preventing further declines in both February and August 2024.
Several technical indicators reinforce the positive outlook:
- BCH has crossed above its 50-day and 25-day Exponential Moving Averages (EMA), a bullish sign suggesting upward momentum.
- The Murrey Math Lines indicator shows BCH moving above the $375 pivot level, hinting at further upside potential.
- The Relative Strength Index (RSI) and Moving Average Convergence Divergence (MACD) indicators are both trending higher, indicating growing buying pressure.
One crucial level to watch is $500, which aligns with a major support and resistance (S&R) zone on the Murrey Math Lines chart. If BCH maintains its upward trend, this price point could serve as the next milestone.
Risks and Key Support Levels to Watch
While the current trajectory favors the bulls, traders should remain cautious of potential downside risks. The cryptocurrency market is highly volatile, and external factors such as regulatory changes or macroeconomic shifts could impact prices.
If BCH fails to hold its recent gains, a pullback to the $300 support level is possible. A break below this threshold would invalidate the bullish outlook and could signal further downside pressure.
For now, investors are keeping a close eye on ETF developments and broader market trends. If a spot Bitcoin Cash ETF becomes a reality, the current rally could be just the beginning.
