Bitcoin Cash Surges 11% as Bitcoin Drops Amid Network Congestion
Bitcoin Cash (BCH) has seen an 11% increase in value over the last 24 hours, even as Bitcoin’s price has declined. The drop in Bitcoin’s price follows network congestion that sent transaction fees skyrocketing over the weekend as demand for Bitcoin Ordinals ramped up. BCH, which is a spinoff of the Bitcoin blockchain, designed to be more scalable and cheaper, appears to have benefited from Bitcoin’s backlog of transactions, some market observers are saying. BCH, which was recently trading over $122, was one of the only digital assets trading in the green on Tuesday.
“Bitcoin cash is a fork of Bitcoin so the market is speculating that there will be some spillover as a result of high fees/congestion,” said Arca trader Kyle Doane in a note to CoinDesk. However, Doane noted that the uptick for Bitcoin Cash will most likely be short-lived. The Bitcoin blockchain’s flood of pending transactions over the weekend resulted in Binance, the world’s largest crypto exchange, temporarily pausing Bitcoin withdrawals.
Laurent Kssis, crypto advisor at CEC Capital, said that he doubts that the two are related. “I’m not confident BCH’s rise is a result of Bitcoin’s network congestion as the move is not that detrimental to BTC,” Kssis added. “Sure BTC is dropping, but this has been in the cards for a few days.” Bitcoin was recently trading at about $27,600, roughly flat from Monday, same time, and about where it stood at the beginning of the month. Last week, the largest cryptocurrency by market capitalization was trading near $30,000.
Kssis predicts Bitcoin Cash will drop again to around $110, as the current move up doesn’t appear to have staying power. Despite the temporary surge, some experts believe that Bitcoin Cash is not a good long-term investment. According to a report by crypto research firm Messari, Bitcoin Cash has been struggling to attract and retain developers, which is a key factor in the success of any blockchain project. Furthermore, Bitcoin Cash’s block size limit of 32MB is still significantly smaller than Bitcoin’s limit of 1MB, which could limit its scalability in the long run.
In contrast, Bitcoin’s popularity and adoption continue to grow. The world’s largest asset manager, BlackRock, has recently authorized two of its funds to invest in Bitcoin futures, and other financial institutions, such as PayPal and Square, have also entered the cryptocurrency market. Additionally, Bitcoin’s limited supply of 21 million coins, combined with its increasing demand, has led some experts to predict that its price could reach $100,000 or more in the coming years.
In conclusion, while Bitcoin Cash may have seen a temporary surge in value due to Bitcoin’s network congestion, it remains to be seen whether it can sustain this growth in the long run. Meanwhile, Bitcoin’s popularity and adoption continue to rise, making it a potentially more attractive investment option for those looking to enter the cryptocurrency market.
