Bitcoin Cash price has moved to a bear market after falling by 22%.
The coin has more short-term downside as it moves from the overbought zone.
Some investors believe this is a good time to dollar cost average (DCA)
Bitcoin Cash price has moved into a bear market as investors start taking profits after the spectacular performance in June. The coin retreated to a low of $250 on Wednesday, about 22% below the highest level in June.
BCH enters a bear market
Bitcoin Cash had one of the best period in June as investors moved to proof-of-work cryptocurrencies after the SEC lawsuit on Binance and Coinbase. Investors believe that coins like BCH, Verge, and Litecoin will benefit if the SEC decides to move to war against crypto tokens like Solana and Cardano.
Bitcoin Cash price has now moved into a bear market by falling by over 20% from its highest level in June. This decline is mostly because of profit-taking since BTC was up by more than 250% between the lowest and highest points in June.
Historically, investors tend to exit an asset after rising sharply in a certain period. When it drops, the so-called Fear of Missing Out (FOMO) situation reverses and people who bought during the uptrend starts to exit.
BCH price also retreated as Bitcoin price struggled to move above the upper side of the bullish flag pattern that has been forming. BTC is hovering at $30,300 and there is a possibility that it will move below $30,000 soon.
Further, BCH also dropped as American stocks retreated after the Independence Day holiday. The Dow Jones index retreated by 50 points while the Nasdaq 100 fell by about 20 points.
Bitcoin Cash price forecast
On the daily chart, we see that the BCH price has retreated in the past few days. This retreat started after the coin moved to the extreme greed zone. The coin has now formed three black crows pattern, which happens when three red candles follow each other.
Bitcoin Cash remains much higher than the 50-day and 100-day moving averages while the Relative Strength Index (RSI) moved below the overbought level. Therefore, I suspect that Bitcoin Cash price has some more downside in the near term before making an eventual comeback.
This pullback will likely see it drop to the next key support at $210, which is the 25-day moving average. Therefore, dollar cost averaging, where a trader buys the coin as it drops could be a good idea since it will ultimately bounce back.