Bitcoin Cash has seen a surge in price as mining profitability overtakes Bitcoin, 8 MB blocks are successfully mined, and user acceptance gains traction. Since the inception of Bitcoin Cash (BCH) following the August 1st split there has been much debate on what to do, or if Bitcoin Cash will find support. At this time it is safe to say that it has found its support and holding was the best option.
In its first week BCH experienced a significant sell off dropping to $190.10 before rebounding off lows. At the time mining difficulty was equivalent to Bitcoin, and not profitable, providing no economic incentive for miners.
Early investors took advantage of the selloff in the second week, adding to their position, and causing a small rebound, settling around $300. Due to a low total hashrate (and long block times), the mining difficulty began to drop making mining easier and inching closer to profitability.
As BCH entered its third week mining had become 50% more profitable than Bitcoin as difficulty continued to drop and the price of BCH appreciated. Investors took notice, as prices surged to new highs approaching $1000, an over 400% increase of the lows. Additional exchanges also began to support BCH increasing availability to investors and growing the user base.
Expect BCH to continue to see volatility in both price and mining profitability. If mining profitability continues to favor BCH expect more miners to come online and the network to strengthen. If not, the price could take a tumble. Depending on your perspective this may present a great buying opportunity, or if you’re more conservative, a wait and see approach may be warranted.
If you’re unfamiliar with the concepts of mining see our previous article What is Bitcoin Mining?