Bitcoin Cash (BCH) Halving Event This April: Historical Data and Potential Implications for Price Action

  • Bitcoin Cash (BCH) has failed to keep pace with the broader market. In the last week it lost 7.3%. With the halving expected in three weeks, analysts expect a bigger drop on the horizon.
  • BCH miners abandoned their holdings; Since last April, miners have sold nearly three million tokens, worth more than $1 billion, as they prepare for the price effects of next month’s halving.

Bitcoin Cash was one of the largest projects in the cryptocurrency industry: in 2017, with a market capitalization of $31.4 billion, BCH ended the year as the third largest after Bitcoin and Ethereum. However, it has since fallen out of the top ten and, as its halving approaches, it could drop further.

BCH is trading at $411, gaining slightly on the day despite a drastic drop in trading volume. It has lost more than 7% in the past week, shedding some of its gains as it skyrocketed in early March to hit a two-year high of $508.

BCH Halving: What Historical Data Says About Price Action

Bitcoin Cash will be halved within 19 days on April 4, reducing the block reward from 6.25 BCH ($2,577) to 3.125 BCH ($1,288). The BCH halving comes 19 days before Bitcoin undergoes its halving.

Like any other cryptocurrency, the halving is one of the most significant events in the BCH ecosystem and always has a huge impact on its price.

Historical data shows that BCH holders tend to sell off their coins before the halving. One of the most active groups in the sell-off are the miners; Leading up to the April 2020 BCH halving, miners downloaded millions of tokens.

This time is no different, as according to data from IntoTheBlock, major miners and mining pools in the BCH ecosystem have reduced their token holdings from 9.2 million to 6.65 million over the past 11 months. This equates to 30% of their holdings, which are worth $1.1 billion. While some of the selling was for profit taking after Bitcoin Cash hit two-year highs, historical data shows that miners are selling their tokens in preparation for the halving.

This trend tends to reverse after the halving. This is because once the reward is reduced, several miners become unprofitable and exit the ecosystem. In response, the network adjusts its mining difficulty to reflect existing miners, and as difficulty decreases, profitability soars.

In 2020, miners increased their BCH holdings by 2.7 million tokens between the April halving date and November. This was reflected in the price, which increased by 480% within six months of the halving.

This trend is expected to repeat itself, and while dumping could severely suppress the price of BCH as we approach the halving, the market is expected to reverse the downward trend in the months following the halving.

The direction of Bitcoin Cash’s price will also depend in part on what happens to Bitcoin (BTC) after the halving, as for years the two have been directly correlated, as Crypto News Flash has noted in the past.

This article is provided for informational purposes only and is not intended as investment advice. The content does not constitute a recommendation to buy, sell or hold any securities or financial instruments. Readers should conduct their own research and consult financial advisors before making investment decisions. The information presented may not be current and may become obsolete.

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