Provided below is a comment written by FISCO guest analyst Tetsuyuki Oishi (CEO of Bitcoin Lab; Twitter: @bigstonebtc). FISCO aims to provide diverse information to investors by connecting with individuals who actively provide information.
*Written on April 12, 2020
Bitcoin Cash (BCH) has been losing its hash rate. BCH’s hash rate has literally halved from around 3.2EHash immediately before the halving to around 1.5EHash after the halving.
Although this was widely expected, it is a little surprising to see that it clearly halved as is suggested by theory.
Meanwhile, the BCH price has not been affected so much. If we are to assume that the ratio of the hash rate decides the price, BCH with a low hash rate and security should be overvalued much more than Bitcoin (BTC). The theoretical price of BCH calculated from the hash rate is around USD 100 to USD 120. Its recent trading price of USD 235 is significantly overvalued.
Whether or not the current price will fall to reflect the actual situation of the hash rate is attracting attention. If the BCH price remains stable even after the BTC halving, which will take place in a month, BCH and BTC conditions will be the same again and the BCH price will be justified. The reason why the BCH price has remained stable may be because a fall in the hash rate over the past month is viewed as a temporary dip or BCH traders may be trading BCH based only on the recent price, without paying close attention to the hash rate.
Either way, because a fall in the hash rate due to gaps in the halving period is a unique phenomenon caused by cryptocurrency specifications, focusing on this type of distortion when considering what can be done seems to follow the royal road of investment fundamentals.
For reference, this has no impact on BTC. Viewed from BTC’s perspectives, because the resulting hash rate that is added is only 1.5%, it is unlikely to have a major impact on its price.
Author: Tetsuyuki Oishi (Tetsu ‘BIGSTONE’ OISHI)
Blog name: Bitcoin Lab