Chart of the Week: Bitcoin Cash Poised for Potential Double-Digit Gains, Bullish Indicators Suggest Price Surge

Bitcoin Cash (BCH) has shown impressive momentum over the past month, adding nearly 35% to its value, with a notable 12% rally on November 21. This surge came in tandem with Bitcoin’s (BTC) rise to an all-time high of $98,384, sparking positive movements across other top cryptocurrencies, including BCH.

An analysis of both on-chain and technical indicators, along with data from the derivatives market, suggests BCH could continue its rally and potentially test its mid-April 2024 high of $569.10.

Bitcoin's Record High and BCH’s Evolution

On November 21, Bitcoin hit a new record high of $98,384, pushing closer to the $100,000 milestone. Bitcoin Cash, which was forked from Bitcoin in 2017, has followed Bitcoin’s price trajectory, though with notable volatility. BCH reached a peak of $1,650 in May 2021 but has been consolidating since April 2024 without forming a clear trend.

The BCH price has surged nearly 30% since mid-November, and on-chain indicators now suggest that further gains are likely for the Bitcoin spin-off token.

Rising Active Addresses Signal Growing Demand for BCH

Since August 2024, Bitcoin Cash has seen a consistent increase in active addresses, a positive sign for the token's demand. According to data from Santiment, this sustained uptrend in active addresses reflects ongoing interest from BCH traders, providing a bullish outlook.

Additionally, BCH’s on-chain transaction volume is showing favorable signs, with the ratio of daily transactions in profit to those in loss standing at 2.141 on November 21. This indicates that twice as many transactions are profitable as those that are not, reinforcing the positive sentiment around BCH.

Positive Sentiment in the Derivatives Market

Traders are showing optimism in the derivatives market as well. Open interest in BCH has increased by 33%, according to Coinglass, signaling strong demand for BCH in the futures market. Additionally, derivatives trade volume surged 613%, reaching $2.35 billion. Exchanges such as Binance and OKX are seeing a long/short ratio near 2, suggesting that traders are largely bullish on BCH and expect the price to rise further.

Since November 5, 2024, BCH’s open interest has grown steadily, from $190.74 million to $254.87 million by November 21, indicating increasing confidence in the token’s future price performance.

Technical Indicators Suggest Potential for 18% Gains

Looking at the BCH/USDT daily price chart, the token has been stuck within a consolidation range between $272.70 and $568.20. A daily candlestick close above $568.20 would confirm a bullish breakout, potentially driving BCH towards its April 2024 high of $719.50. The next key resistance level is $805.80, a significant mark from May 2021.

Several technical indicators reinforce the bullish outlook for BCH. The relative strength index (RSI) reads 64, indicating there is still room for upward movement before the token enters an overbought zone. Additionally, the moving average convergence divergence (MACD) is displaying positive momentum, with green histogram bars above the neutral line. The awesome oscillator also aligns with these bullish indicators, supporting the likelihood of further gains.

Possible Risks and Support Levels

While the bullish outlook for BCH remains strong, a failure to close above $568.20 would invalidate the current rally. In that case, BCH could find support at the midpoint of the consolidation range, around $419.90, or the 50-day exponential moving average, which sits at $388.50.

As BCH continues to show positive on-chain and technical indicators, traders should monitor key levels and watch for any signs of a breakout or reversal. The increasing optimism in both the spot and derivatives markets points to a potentially strong period for Bitcoin Cash.