Bitcoin Cash is up more than 30% from its lowest level so far this year and is almost entering overbought territory. However, BCH enthusiasts that might be worried about missing out still have a chance at catching the boat.
The latest bullish relief may have provided some relief from the bears. However, zooming out reveals that the latest upside is rather minuscule compared to the extent of BCH’s downside.
To put it into perspective, Bitcoin Cash needs at least a 10x move to recover back within its previous all-time high (ATH) range.
The alt is still trading below its January 2020 levels. This highlights the extent of its sell-off. It also demonstrates why BCH is still oversold.
It simply means that investors still have a chance at a healthy entry point for the next bullish phase.
While this might be favorable for long-term HODLers, things are less certain for short-term traders.
Bitcoin Cash’s short-term outlook
BCH’s $130.6 press-time price of 24 July is still far from the next resistance zone.
However, it has experienced increased friction after crossing above the 50-day moving average.
BCH showed signs of a sell-off from 20 June to 23 June and this was backed by some outflows according to the MFI.
However, it continues to show an affinity for the upside but on-chain metrics suggest that whales might be anticipating a cooldown, especially after the latest rally.
However, it is worth noting that BCH is not yet oversold. Hence, there is a chance that it might continue rallying.
Some of Bitcoin Cash’s metrics already point toward a potential downside. For example, the supply held by whales has declined significantly in the last 30 days.
Meanwhile, its MVRV ratio did the opposite by climbing. At press time, it was at its highest level. This means many traders who bought the dip are in profit.
The price uptick despite the outflows from whales suggests that the bulls were supported by strong retail demand.
However, retail buying pressure might not survive long without support from larger addresses.
Furthermore, 24-hour whale transaction activity and active addresses dipped significantly in the last four days.
It is uncharacteristic of whales to buy higher, thus they will likely wait for another price drop to buy at a more favorable entry point.
This is assuming that retail volume runs out of steam, but many of the buyers in this segment might be long-term investors, hence raising the floor price.
But, there are always ups and downs, and the chances of a wave of FUD pushing and wiping out some of the latest gains are also significantly high.