Bitcoin Cash price depends on Bitcoin. It is a statement that is normally heard within the cryptoverse. But is it true?
About the Bitcoin Cash price
Where does Bitcoin Cash come from?
As we well know, Bitcoin Cash (BCH) was born as a consequence of a BTC Hard Fork in the middle of 2017. The same year in which each BTC token reached the price of $ 20,000.
But, the year 2017 was not marked only by the incredible rise in prices in the crypto market. Also due to the massive congestion of the Bitcoin Blockchain network, which had a block size of only 1 MB. Back then, transactions could take days, and cost up to $ 50 per commission.
This situation caused the progressive distancing of the crypto ecosystem from those small hodls, which did not have the financial muscle, nor the technical capacity, to trade in such volatile times. In addition, it made it impossible for the world’s first crypto to fulfill one of its functions, to be the promised digital money.
For this reason, a number of BTC Core developers, miners, and hodls agreed to, using a Hard Fork, create a new BTC-based cryptocurrency. Which would have a larger block size.
Bitcoin Cash (BCH) was the chosen name, in reference to which they were really going to be “digital money”. This featured a much larger block size of 32MB, which in turn meant much lower transition costs and much less time in the transaction validation process.
Knowing where BCH comes from, we can then try to answer the question if the price of Bitcoin Cash really depends on that of BTC.
Does BCH price depend on BTC?
For this, we will have to resort a little to history. How have the two prices of these two cryptos behaved?
In July 2017, at the time of its creation, each BCH was priced at $ 549. Instead, each BTC about $ 2,700. The gap between them was approximately 5. That is, with 1 BTC you could acquire 5 BCH.
This significant price reduction was due to the majority of crypto verse not supporting the new altcoin. This behavior, seeing it from today, was very predictable. People new to the crypto ecosystem wanted to have BTC only, not a new crypto that hardly anyone knew about.
Then, in December of that same year, the value of each BTC reached its historical maximum at $ 20K. On the other hand, the Bitcoin Cash price also hit its all-time high at $ 4,100. The gap between prices had been reduced to 4.8 times. This means that the Bitcoin Cash price grew more than the BTC price in percentage terms.
From here, everything went into debacle. Not only for the price of Bitcoin Cash, but also that of the entire crypto ecosystem.
A forceful answer
Currently, the price of each Bitcoin Cash is trading close to $ 220. Almost half of its creation price. Instead BTC is currently trading at $ 6,700, representing a gap between BCH and BTC of almost 31 times.
This means only one thing, the price of Bitcoin Cash has plummeted compared to that of Bitcoin since 2017. Not once, twice, or three times, but almost 25 times.
But, beware, we could fall into a trap to think that the difference in the value of these two cryptos comes from the spot price. We actually have to see the percentage changes, this is where we see the real difference between their true market valuations.
In other words, with a single BTC 30 BCH could be acquired, surprising? Even in December 2018, this gap could reach 42. While in 2017 there were only 5.
This gives us a forceful answer, that Bitcoin Cash price does not depend, at almost nothing, from the price of its father, Bitcoin.
We say “almost nothing” because in general all cryptos come from BTC, whether or not they are your Hard Fork. Furthermore, the difference between the total transaction volume, total market capitalization and domain of Bitcoin compared to the others, is simply absurd.
So Bitcoin will always dictate the path of the crypto ecosystem. If BTC enters a rally, whether it is bullish or bearish, the others will follow. But, not always in the same proportion.
The gap continues to widen
Increasing the Bitcoin Cash price gap from that of Bitcoin tells us several things.
The first is that Bitcoin rises have not impacted BCH as strongly, instead falls have been steeper in Bitcoin Cash.
Second is that the price of Bitcoin Cash price does not depend, in almost nothing, of the price of his father.