Why Bitcoin Cash Has Outperformed Bitcoin in 2019: Reasons for BCH Price Outdueling BTC
Compared to Bitcoin, the performance of Bitcoin cash has been impressive – in fact, the coin has doubled in value since the start of the year.
According to data sourced from CoinDesk, BCH’s value has soared from $160.53 in January to $329.85 this month, representing a 105% increase. In comparison, Bitcoin has improved by 45 %, increasing from $3690.21 in January to the current $5343.25.
The following are the reasons given by analysts to explain the different performances of Bitcoin and Bitcoin Cash.
Overall, the crypto market has recorded a significant inflow of cash throughout 2019. Charles Hayter, the CEO of CryptoCompare, a cryptocurrency data platform, said that the 45% increase in the market cap of all digital currencies demonstrates the various coins are performing impressively.
He further noted that coins with smaller market caps move more than bigger cryptocurrencies when investors’ interest in the crypto markets grows.
Bitcoin is the reserve currency for the entire crypto industry. When investors buy large quantities of digital assets, Bitcoin experiences huge inflows of cash. This often increases the value of altcoins, an occurrence known as the ‘Spillover Effect’.
Many analysts believe that the surge of Bitcoin Cash is a result of this occurrence. Jon DiPasquale, the CEO of BitBull Capital, a crypto hedge fund, agrees with this belief. His sentiments were seconded by Shone Anstey, the chairperson of the Blockchain Intelligence Group.
Matters of Scale
Experts also believe that the disparities in the performance of Bitcoin Cash and Bitcoin can be attributed to the huge variation in the market value of the two cryptocurrencies. As of now, Bitcoin has a market cap of $92 billion, while Bitcoin Cash has a market cap of $5.5 billion. DiPasquale is certain that any increases in the value of Bitcoin Cash are overstated with respect to Bitcoin.
Jeff Dorman, the CEO of Arca, noted that Bitcoin Cash has lower liquidity than Bitcoin. Therefore, Bitcoin Cash has a higher chance of sharper price surges when the market is bullish.
Low Entry Barrier
Another factor that has influenced the impressive performance of Bitcoin Cash is its cheapness. One unit of Bitcoin Cash is more affordable than a single unit of Bitcoin.
DiPasquale asserted that the lower price of Bitcoin Cash encourages beginners to buy it over Bitcoin because they prefer owning a complete unit to a fractional unit. This opinion was supported by the chief strategist of TradeStation Crypto, James Putra, who said investors usually favor cheap coins because they are deemed as bargains.
Lastly, the experts stated that Bitcoin Cash has bettered Bitcoin’s performance because of the difference between Bitcoin futures and Bitcoin Cash futures.
John Hargrave, the publisher of Bitcoin Market Journal, said that Bitcoin futures are less speculative than Bitcoin Cash futures because they are regulated and sold through the CME.
Regarding Bitcoin Cash futures, John said that they are less developed than Bitcoin futures. They allow users to easily predict the coin's future, which contributes to an increase in its price.