Bitcoin Cash: As unique active addresses surge, how did BCH react?
- The daily count of addresses trading BCH has rallied to a one-month high.
- However, the coin’s price could decline further.
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BCH saw a surge in network activity due to its statistically significant correlation with leading coin Bitcoin [BTC], whose price rallied above the key resistance level of $27,800 to exchange hands briefly above $28,500 on 2 October.
According to information from the on-chain data provider, BCH recorded a daily active address count of 163,890 on 3 October, its highest since mid-August.
A price surge or otherwise?
BCH exchanged hands at $229.15 at press time, logging a 6% price decline in the past 24 hours. Failing to initiate any price rally following BTC’s brief stint above $28,000, BCH has suffered a price decline since the month began.
According to data from CoinMarketCap, the coin’s value has since dropped by 2%. The growth in daily active addresses within the same period hints at the re-emergence of bullish sentiments in the market, according to the Price-Daily Active Address Divergence model.
According to Santiment, this metric tracks the relationship between an asset’s price and the daily active addresses interacting with the asset.
It is often used to identify potential buying and selling opportunities. According to the model, when an asset’s price rises while the daily count of active addresses declines, it is taken as a sign that the price rally is unsustainable and that a sell-off is imminent.
Conversely, when an asset’s value plummets while the number of daily active addresses sees a surge, it is taken to mean that the sell-off is overdone and that a rebound is imminent.
While this metric suggests that BCH’s price might soon witness an upward correction, key indicators observed on a daily chart indicate otherwise.
For example, the coin’s Chaikin Money Flow (CMF), which measures the net amount of money flowing in and out of BCH’s spot market, was negative at press time. A CMF value below zero is a sign of weakness in the market, as it suggests a liquidity exit. BCH’s CMF was -0.02 as of this writing.
A pullback seems…
Likewise, BCH’s price rallied above the upper band of its Bollinger Bands indicator at press time. This showed that the coin was overbought even at this price level, and a pullback was imminent.
Read Bitcoin Cash’s [BCH] Price Prediction 2023-24
An assessment of traders’ activity in the coin’s futures market offered more precise insights into where market sentiments lie. According to data from Coinglass, BCH has been predominantly trailed by negative funding rates since 4 June.
When an asset’s funding rates are negative in this manner, it means that traders have continued to open trade positions against the asset’s price, showing little to no conviction in any positive price performance.