What Influences BCH Price?
There are many factors that influence the price of BCH and other cryptocurrencies. Digital assets like crypto are highly sensitive to news and events as well as changes in market conditions. This is what makes them highly volatile—meaning that their prices rise and fall sharply within a short period of time.
Important News/Supply and Demand Fluctuations
When something happens in the news, it could cause the price of cryptocurrencies like Bitcoin Cash to rise or fall. That’s because anything that takes place that causes people to lose or gain trust in the token impacts the supply and demand of BCH. Therefore, the Bitcoin Cash price depends heavily on supply and demand fluctuations.
When more investors purchase BCH, demand goes up. This, will in turn, cause the price to go up. But on the other hand, fewer people may invest in the coin, which lowers its demand. The price will go down, as a result.
Innovation & Development
New technology can change investor sentiment about a particular cryptocurrency. Innovation and development could either cause investors to gravitate more towards one coin or lose interest in another coin.
For example, new technology could cause Bitcoin Cash to become obsolete. For example, the entire purpose of creating BCH was for its larger block sizes to make it more efficient and handle more transactions. So, it might seem like BCH has the advantage over Bitcoin. Yet, new technology is emerging that makes Bitcoin just as efficient as Bitcoin Cash.
This emerging technology is able to achieve this, and still allow Bitcoin to maintain the security and decentralization that makes it stand out from other cryptocurrencies. So, it seems like this solution, known as the Lightning Network, has ended one use case that Bitcoin Cash had over its predecessor.
Therefore, it may not be surprising to some investors if the price of BCH significant;y dips as it loses its value.
Crypto Cycle
Market cycles happen in all financial markets. In the world of cryptocurrency, this is called the crypto cycle. In the crypto cycle, prices rise, peak, fall, and then, bottom out. This signals the start of a brand new crypto cycle. But unlike other financial markets, the change in price is often more dramatic and occurs in a shorter period. If you’ve ever invested in any type of cryptocurrency, then you’ve likely noticed how volatile they can be.
The same is true for Bitcoin Cash. There are many reasons why cryptocurrencies are so volatile:
Large volumes of crypto are owned by few large investors.
They’re heavily influenced by supply and demand, investor and user sentiments, government regulations, and media hype.
They lack a regulatory body.
FED Monetary Cycles
The Fed impacts the price of crypto any time it decides to raise interest rates. High interests rates mean investors will see a higher return on their savings.
So, when interest rates are higher, investors tend to gravitate towards safe assets like bonds and treasuries because their yields are now higher.
As a result, risky assets like technology stocks and crypto are less attractive. This, in turn, lowers the price of different cryptocurrencies like BCH because demand is now lower.