Amidst a drawdown in the crypto markets this week, assets like Bitcoin Cash [BCH] and Loopring find themselves at the center of shorting activities on Binance. Despite the market turbulence, there is a silver lining as these assets display early signs of recovery, and short liquidations could potentially act as a catalyst if the markets regain strength. According to a report from Santiment, traders expressing fear, uncertainty, and doubt toward assets such as Bitcoin Cash and Loopring have witnessed price rebounds amidst numerous short positions.
Bitcoin Cash, a fork of the original Bitcoin, has experienced a sharp decline, losing 7% within 24 hours. Originating as an altcoin in 2017, BCH underwent a further split in November 2018, resulting in two separate cryptocurrencies: Bitcoin Cash and Bitcoin SV. After a relatively subdued performance in 2023, the altcoin demonstrated a more bullish outlook in 2024.
The optimism surrounding BCH is attributed to the approval of spot exchange-traded funds [ETFs] by the Securities and Exchange Commission [SEC]. This positive development casts a favorable light on all BTC derivatives and hard forks due to their inherent association with BTC. Bitcoin Cash, as an early hard fork, was speculated to experience a potential rise by the end of the upcoming month.
Recognizing the anticipated upswing, large whale addresses have been actively accumulating Bitcoin Cash for several weeks. Since the end of October, addresses holding between 1,000 and 10,000 BCH have increased their holdings by over 90,000 BCH, equivalent to more than $20 million in a single month, bringing their total holdings to 3.39 million BCH.
Mt. Gox Settlement Impact on Bitcoin Cash Crash
Furthermore, a recent report on January 10 highlighted that over 1 million BTC transactions were processed in 2023 alone, contributing to a cumulative total exceeding 4 million transactions. This surge in transaction volume could be a compelling catalyst for those who view cryptocurrencies as a viable payment facilitation technology, particularly Bitcoin Cash.
However, the unpredictable and whimsical nature of the crypto market has manifested in the past couple of weeks. The overall digital asset market has witnessed a decline, with the aggregate market capitalization of digital assets dropping by over 4% in the last 24 hours. The flash crash in Bitcoin Cash’s value aligns with Mt. Gox’s latest settlement distribution, triggering short-term selling pressure for this particular token.