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Bitcoin Cash (BCH) has extended its bullish momentum, reaching its highest price since December 7. As of June 20, BCH is trading at $485, marking a remarkable 95% increase from its April low. This surge comes amidst strong trading activity, with daily trading volumes climbing 75% to $757 million, predominantly driven by activity on major exchanges such as Binance and HTX.

Key Drivers Behind Bitcoin Cash’s Rally

The recent rally in Bitcoin Cash has been accompanied by soaring futures open interest, which has reached $600 million—its highest level in 2023. Much of this activity has been concentrated on platforms like Binance, Bitget, Bybit, and OKX. However, no single major catalyst appears to explain this upward trajectory, leaving market participants to speculate on possible reasons.

One plausible explanation is BCH’s historical correlation with Bitcoin (BTC). Bitcoin saw modest gains recently, climbing over 1% on Friday, which may have influenced Bitcoin Cash’s price movement. Such correlations often make BCH a proxy for Bitcoin in the eyes of investors.

Potential Risks to the Uptrend

Despite the optimism, there are notable risks that could hinder BCH’s price momentum:

  • Negative Funding Rates: Weighted funding rates have turned negative, signaling that futures market participants expect BCH’s price to decline in the short term.
  • Rising Exchange Inflows: On Thursday, exchange inflows surged to $18 million, the highest level in over a year. Increased inflows to exchanges typically indicate investor selling pressure, which could weigh on BCH’s price.

Technical Analysis of Bitcoin Cash

From a technical perspective, Bitcoin Cash’s price has formed a significant double-bottom pattern at $284, a level it last touched in August 2022 and April 2023. The pattern’s neckline is at $640, which represents a 35% upside from the current price of $485. This bullish formation suggests further potential for upward movement.

Additionally, BCH has broken above both the 50-day and 200-day Exponential Moving Averages (EMAs), reinforcing its bullish trend. The Average Directional Index (ADX) has also risen to 23, indicating growing momentum behind the rally.

Price Outlook

If the bullish trend continues, Bitcoin Cash could target the key resistance level at $640. A breakout above this level would confirm the double-bottom pattern and potentially open the door for further gains. However, traders should remain cautious given the risks of negative funding rates and increased selling pressure.

Bitcoin Cash’s recent performance highlights its volatility and potential as an investment asset. As always, investors are advised to conduct thorough research and consider market risks before making any decisions.

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