Bitcoin Cash (CRYPTO: BCH) is a hard fork of Bitcoin (CRYPTO: BTC). Because of this, its price tends to more or less track that of the foundational cryptocurrency.
As the trading week approached an end, however, the two assets diverged a bit. On Thursday late afternoon, Bitcoin Cash was up by nearly 7% from 4 p.m. ET the previous day, while Bitcoin had only risen by 2.5%. A looming event for Bitcoin Cash was a major reason for this.
The halving looms
Bitcoin Cash is essentially an attempt to make a form of Bitcoin a useful, practical means of exchange for peer-to-peer transactions. While it hasn’t yet succeeded with flying colors in achieving its goal, its close association with the world’s favorite crypto keeps investor interest high.
Like Bitcoin, Bitcoin Cash is halving in the near future. As its name implies, halving occurs when rewards for mining a cryptocurrency are cut neatly in half. This is a way of constricting the supply of a coin.
It’s anticipated that the halving of Bitcoin Cash will occur next Thursday. With one week left to reap the current level of rewards, there’s a rush to buy into it before the rewards drop and the supply starts to narrow.
A viable proxy for Bitcoin?
Since this mini-rally is driven by a particular event, Bitcoin Cash will likely continue to enjoy a bit of a run until the halving hammer comes down. It’ll probably resume its Bitcoin-adjacent trajectory at some point after that, but I’d be concerned that many investors would prefer putting money into the foundational coin instead.
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Eric Volkman has positions in Bitcoin. The Motley Fool has positions in and recommends Bitcoin. The Motley Fool has a disclosure policy.
Why Bitcoin Cash Triumphed on Thursday was originally published by The Motley Fool