Bitcoin Cash: The Risks of Buying BCH Before a Potential $624 Breakout

Bitcoin Cash (BCH) has experienced limited movement within a defined price range since July 2024, between $272 and $624. Although BCH has seen a 22.2% increase since November, it has not yet managed to break through its crucial resistance level at $624. Potential investors and traders are advised to evaluate the current market conditions carefully before making any purchases.

Key Takeaways

Bitcoin Cash has been trading in a price range from $272 to $624 since July 2024.
The cryptocurrency experienced a 22.2% rise since mid-November, contrasting with Bitcoin's 7.4% decline.
Long-term indicators show increasing buying strength, hinting that a breakout is possible.
Caution is advised against purchasing BCH at high price levels without a confirmed breakout.
The short-term outlook indicates a possible opportunity to short-sell near $600.

Bitcoin Cash rally stalls near $624 - Traders need to think tactically

Analyzing Bitcoin Cash's Performance

Since July 2024, Bitcoin Cash (BCH) has remained within a trading range that spans from $272 to $624. Notably, since November 15, BCH has surged by 22.2%, while Bitcoin (BTC) has seen a drop of 7.4% over the same timeframe.

Despite these gains over the past seven weeks, BCH bulls have struggled to achieve a decisive breakout beyond the $624 resistance level.

Bitcoin Cash 1-week Chart Source: BCH/USDT on TradingView

For long-term investors, a positive sign has been the increase in buy volume during this range-bound period. Even though BCH has yet to penetrate the $624 long-term resistance since November 2024, the On-Balance Volume (OBV) shows higher lows, indicating stronger buying pressure over time. This trend suggests that a breakout may occur soon.

Should You Consider Buying BCH Now?

In general, purchasing cryptocurrencies at their price range highs is not advisable. While a breakout could eventually happen — for instance, if Bitcoin rises above $94.5k, leading to a bullish market sentiment — current evidence does not support such an outcome in the immediate future. Until BCH breaks above $624 and retests that level as support, it is prudent for investors to hold off on purchasing BCH above $600.

Is it an Opportunity to Go Short?

Bitcoin Cash Coinalyze Source: Coinalyze

Data from Coinalyze reveals a decline in the spot Cumulative Volume Delta (CVD) over the past three days, indicating increased selling activity in the market. Additionally, the Open Interest has dropped nearly 20% following the rejection of the range highs, reflecting a decrease in speculative confidence.

Bitcoin Cash 1-hour Chart Source: BCH/USDT on TradingView

The 1-hour chart outlines a new short-term range between $575 and $597. The psychological level of $600 may present a short-sell opportunity for traders looking to act on shorter timeframes. Observing the demand zones from $540 to $580, as indicated by the white and pink boxes on the chart, may result in price bounces in these areas. Consequently, short-sellers might expect BCH to fluctuate in these ranges before a potential decline.

A price increase above $605 would nullify the short-term bearish outlook.

Final Thoughts

Disclaimer: The information presented herein does not constitute financial, investment, trading, or other types of advice and is solely the writer's opinion.