Bitcoin Cash (BCHUSD) reached a 40-day low and spiked higher immediately. On-chain data suggests that investors are offloading investments from this coin, creating a market dip.
BCH Plunge: What Could Be The Reason?
The latest Federal Reserve decision has created a steep selling pressure to the broader crypto market, with no exception for the BCH.
As a result, the price fell 35% from the 9 December high, raising questions about the future bullish possibility.
According to on-chain data, a large number of BCH holders liquidated their positions after the Fed’s decision, sparking a fear of further selling pressure.
IntoTheBlock data highlighted a notable reduction in the active wallet number, signalling lower activity on the buyers' side.
BCH On-chain Metrics Analysis
About 40,000 BCH wallets were drained after the latest Fed decision. However, more than 97% of wallets are handled by HODLers, which suggests a positive sign.
This steep drop points to a large BCH shareholder exodus, as many sold their holdings during the most recent market slump.
Given the continued uncertainty, many investors are pulling away from the asset, which underscores the growing investor uneasiness.
Because of the apparent decline in investor confidence, this trend raises concerns about possible short-term downside risks for BCH.
The sharp decline of funded wallets reflects a gloomy market mood, which indicates that many investors no longer regard BCH as a trustworthy store of wealth.
Furthermore, the extensive liquidation has increased the selling pressure on BCH, raising the possibility of elevated volatility.
Bitcoin Cash Price Prediction Technical Analysis
The steep selling pressure from the December 2024 high created concern about the upcoming bullish possibility. However, the price reached the discounted zone from the 640.00 high to the 320.00 low, from which a decent recovery might come.
Looking at the daily chart, the high volume line since November 2024 is just above the current price, working as immediate resistance. Moreover, the 50-day EMA is above the high volume line, working as secondary resistance to the current selling pressure.
In this context, the BCH price is more likely to extend the selling pressure, with the 200-day SMA being the primary target point. Below this line, the next support is at the 307.73 level.
On the bullish side, a bullish break above the high volume line might open a bullish possibility, targeting the 560.00 level. Moreover, overcoming the 500.00 psychological line with a consolidation could extend the buying pressure towards the 625.29 resistance level.
