NOIDA (CoinChapter.com)— Bitcoin Cash (BCH) has had an interesting week so far in June 2024, with the token up by more than 10% WTD on June 6.
The Bitcoin-fork-born crypto token managed to break above $500, a feat that likely attracted more buyers to the market and helped BCH price soar higher. Interestingly, BCH price started June after dropping to a low near $450 after reaching $530 on May 21.
Bulls failed to hold the BCH price above $500, likely due to profit booking. The token continues to struggle to slip back above the price level.
Funding Rate Indicating Bullish Sentiment For Bitcoin Cash
The OI-Weighted Funding Rate is a key indicator of market sentiment. Over the past two months, BCH’s funding rate has been mostly negative, indicating a market dominated by short positions. However, recent shifts towards positive funding rates suggest a growing inclination towards long positions.
The shift signals a change in trader sentiment, with more market participants now betting on a price increase. Such changes often precede price surges as traders anticipate and act on potential upward movements.
Moreover, BCH Futures Open Interest represents the total value of outstanding futures contracts. From late December to early June, BCH’s OI showed significant fluctuations, peaking near $867 million in early April 2024.
Although there was a subsequent decline, OI stabilized between $300 million and $400 million in May and early June. The stability in OI indicates sustained interest and participation in Bitcoin Cash futures, reflecting a balanced market with steady trading activity.
The consistent OI, combined with the recent positive shift in funding rates, suggests that market participants are regaining confidence in BCH. Moreover, the renewed confidence likely contributes to the upward price movement as traders adjust their positions in anticipation of further gains.
BCH Price Forms Bullish Pattern
Bitcoin Cash price has formed a bullish technical setup called the ‘bull pennant.’
The bull pennant pattern signals a potential continuation of an upward trend. It forms when the price of an asset consolidates in a narrow, tapering range following a strong upward movement, resembling a small triangular flag.
The pattern comprises two converging trendlines that connect the high and low prices of the consolidation phase. During this phase, trading volume typically decreases, reflecting market indecision.
For the pattern to validate a bullish continuation, a breakout above the upper trendline should occur, accompanied by a significant increase in volume. This surge in volume indicates strong buying pressure. This would reinforce the likelihood of continued upward momentum.
If the volume does not increase significantly at the breakout, there’s a higher risk that the price will retreat back into the pennant. This would indicate a false breakout and potential reversal.
Per the rules of technical analysis, if BCH price breaks out of the bull pennant, it can theoretically target a price level over 242% higher than its current prices, meaning a price target near $1,690.
The pattern could be another reason why BCH price is up today.
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