In August 2017 there was a hard fork of bitcoin. Bitcoin cash was born.
Each holder of bitcoin received an equal number of bitcoin cash tokens.
The reason for the fork was disagreement about the future direction of bitcoin. One factions wanted a larger block size to accommodate more transactions, faster transactions and less fees. The other faction wanted a different amendment known as Segwit.
After the split both sides tried to claim that their token was the “true bitcoin”.
We now know that the Segwit side won and their bitcoin core is regarded as the true bitcoin (BTC)while the spin-off is known as bitcoin cash (BCH).
For a while the prices of bitcoin and bitcoin cash were relatively close. One BTC would buy around 6 to 9 BCH.
Since 2017 the price of BTC and BCH have been drifting apart. Bitcoin has moved up. The longer term ratio between the two coins can be seen in the chart below. As of today one bitcoin buys around 70 bitcoin cash.
Is bitcoin cash too cheap?
In dollar terms, the BCH price is still in the range it traded at shortly after the fork and it is well below the peak of over $4000 achieved in December 2017. e BTC, on the other hand, is well above its December 2017 peak of nearly $20k.
Currently the BCH price is around $700. It has gone nowhere while the price of bitcoin, ethereum and most altcoins have been soaring.
BTC is the original that everyone has heard of. However fans of BCH describe it as a “better bitcoin”. BTC and BCH, are, effectively they same thing except that BCH has a larger block size, faster transactions and lower costs per transaction.
Both BTC and BCH have a maximum fixed supply of 21 million and both go through a “halvening” every four years. With BTC and BCH being so alike, why has BTC performed so much better? The answer lies simply in human psychology. The crowd decided which was the true bitcoin, and bought that.
BCH solves many of bitcoins problems. It’s much more accessible to people trading smaller amounts.
As retail investors and users get more into crypto, many will discover that BCH won’t wreck them on fees, and that could boost BCH greatly.
BTC is still the king of crypto. It still holds the crown.
However, with BCH so cheap, some of the money which missed the BTC boat may be looking for alternatives. BCH is so similar to BTC, that investors may just turn there. BCH has enough legitimacy and recognition that it could really take off with retail investors, which could then pull in some institutional money.
Is BCH starting to recover some of its lost ground?
Take a look at the recent chart of BCH against the USD. The price has started rising. It looks like interest in owning BCH is now growing.
Whilst BCH seems to be breaking out in USD terms it hasn’t yet in BTC terms. In the chart below, which prices BCH in BTC terms, we can see that that BCH still has not broken out of its long term downtrend. When it does, it will really fly.
Although the bullish signs are not yet confirmed, particularly when we look at the last chart, things are stirring. I think it is worth taking some of the money off your other cryptos to stock up on BCH while it is still cheap.