Many people have suddenly flipped bearish on Bitcoin Cash (BCH) as the bitcoin fork plunged to as low as $255.10 on July 15. That’s a drop of over 50 percent from this year’s high of $517.12 which was posted on June 22.
Nevertheless, the cryptocurrency is still up by almost 95 percent year-to-date even after a 50 percent devaluation. This says a lot about the strength of Bitcoin Cash. We looked under the hood to investigate the source of this bullishness. It was surprising to discover that the cryptocurrency has made numerous innovations and improvements over the last few months.
We believe that these developments could catalyze the cryptocurrency’s next leg up.
Bitcoin Cash Now Offers Enhanced Privacy Features
Bitcoin Cash holders can now use CashShuffle. The mixing software is currently being integrated into many Bitcoin Cash wallets. For now, it is available on the Electron Cash Wallet.
Cash Shuffle allows users to obscure their transactions and makes it difficult for prying eyes to track their coins.
With this development, Bitcoin Cash has a distinct advantage over bitcoin. The privacy feature significantly increases its fungibility. Since users have the option to keep transactions difficult to track, it dramatically decreases the odds of coins being labeled as “tainted.”
Keep in mind, there are some bad actors in the cryptocurrency world and a chain analysis can reveal coins that have been used for illegal purposes such as funding terrorism. This can negatively impact the fungibility of the crypto tokens. Their value can suffer just because an institution like the government discovers that they’ve been used to fund dirty deeds.
On the other hand, there are many users who are not bad actors but simply don’t want others analyzing their transactions.
Thus, the enhanced privacy feature helps ensure that a chain analysis remains difficult and that all coins have the same value (fungibility). This development is so important to the Bitcoin Cash community that the use of CashShuffle has significantly grown every week.
Bitcoin Cash’s new enhanced privacy feature has been popular to many users | Source: CashShuffleStats
Onchain Transaction Volume Has Gone Through the Roof
In addition to this new functionality, an analysis of the on-chain transactions of Bitcoin Cash shows that the on-chain transaction volume has skyrocketed from $7 billion in March to $71 billion in July. That’s a mind-numbing growth of over 914 percent in just four months. What’s more impressive is that this data is from the beginning of July.
Bitcoin Cash’s on-chain transaction volume has ballooned in the last five months | Source: CoinSpice
With the sudden increase in on-chain transaction volume, Bitcoin Cash is now the second most valuable chain in terms of volume transacted via the blockchain. Currently, on-chain transactions amount to $2 billion per day. It is way ahead of other cryptocurrencies such as Ethereum, Litecoin, and Ripple in this regard.
Some blame volume manipulation as the reason for the spike. However, further research tells us that people have been buying and holding Bitcoin Cash. A look at the network’s Unspent Transaction Outputs (UTXO) reveals that the cryptocurrency has exceeded the 2017 bull market level. This is important because UTXO growth tells us that more people are buying Bitcoin Cash and transferring the crypto tokens to their wallets – hence, the term unspent.
Bitcoin Cash’s UTXO has been on the rise | Source: BitcoinCharts
Bottom Line: Robust Fundamentals Will Likely Drive Prices Higher
Bitcoin Cash may not share the limelight with bitcoin, but it is undeniably making a lot of progress in the background. The enhanced privacy feature helps make it difficult for institutions to track user transactions. On top of that, the sudden spike in on-chain transaction volume points to greater adoption of the cryptocurrency. The next bull market should be very exciting for Bitcoin Cash.