Bitcoin Cash [BCH] crosses 6 months high; Why should investors be cautious?

• Bitcoin Cash’s price reached its highest since August 2022.
• Volume increased as BCH could soon reach overvalued levels.

Bitcoin Cash [BCH] rose to its highest value since August 2022, after it breached the $150 region on February 20. According to CoinMarketCap, the cryptocurrency registered one of the biggest gains on the said date as it rallied towards the high. However, at press time, the momentum appears to have waned as BCH traded at $147. 53.

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BCH greens in danger of…

It has been matters where a slide like this was only a short-term inconvenience. So, is this one of those times? Based on the daily chart, the Relative Strength Index (RSI) was higher than normal at 63.74. The indicator is a momentum oscillator that measures changes in price movements and speed.

Now the BCH RSI value indicated that the cryptocurrency had high purchasing power. But in the case where the value hits 70, it means it has hit an overbought zone. Therefore, there could be a significant price reversal in this area.

According to the Moving Average Convergence Divergence (MACD), Bitcoin Cash momentum was not necessarily bullish. This was because the blue dynamic line was positioned just slightly above the orange one. This condition meant that buyers and sellers were in a fierce competition for control. But the greens still had an edge.

Furthermore, the Directional Movement Index (DMI) suggested consolidation in the short term as there was no support for a sustained rally.

Source: TradingView

As of this writing, the -DMI (red) was 8.93. The opposite number, +DMI (green), was significantly higher at 24.73. But the average directional index (ADX), which signals weak or strong asset direction, trended lower. This means that the greens may be interrupted before it can BCH $150 again.

The driving forces behind the rally could…

As for the status of the chain, Bitcoin Cash’s sentiment has been one of the driving forces behind the latest rally, according to Santiment. At the time of writing, the positive sentiment was 10.29. On the other hand, negative sentiment was 6.71.

Nevertheless, the minimal difference between both calculations could mean that the positive perception of the cryptocurrency had decreased.

Source: Sentiment

Realistic or not, here it is BCH’s market value in BTC’s terms

Also, there have been a lot of transactions going through the Bitcoin Cash network lately, as shown by the volume. At press time, BCH’s volume was 346.09 million.

The ratio between market value and realized value (MVRV) was 10.26%. The calculation describes the rate at which the owners have profited and how valuable an asset is. So high ratio implied that the rally had produced good gains for the holders, but it could also suggest an overvalued state in the short term.

Source: Sentiment