Determining Investor Sentiment via Bitcoin Cash’s Investment Flow

A new analysis emerged on December 1, 2017 from the research team at BitMEX regarding investment flow data for Bitcoin Cash (BCH). The most recent publication follows an update from September 7, 2017, which delivered a thorough outline of the philosophical differences between the two chains and what this would mean for investors in both. Ultimately, the findings in December indicate that “the future of each coin may now be determined more on merit or utility, rather than the opinion of the holders at the time of the fork.”

Analyzing Investment Flows Then and Now

According to data collected by the research group, 2.8 million bitcoin cash coins were spent between August 23 and September 7, 2017. This figure was determined by subtracting the coins that were unspent at the the time of the work from the total coin supply. Comparatively, 3.4 million bitcoin were spent during the same period.

Source: BitMEX

Using the data points of 2.8 and 3.4 million, the analysts arrived at two conclusions.

They first identified that bitcoin cash has “c82[percent] of the spend, compared to [BTC] (2.8m/3.4m = c82[percent]),” but only 4.9 percent of the transaction volume leading to the BitMEX’s team assumption that most of the spends for BCH are actually divestments.

The second conclusion showed that bitcoin cash had a relatively low transaction volume around 4.9 percent leading one to believe that the digital currency is related to “investment flow.” The September report pointed out that only 17.2 percent of BCH handed out following the split was spent, with the remaining percentage of the 16.5 million tokens at the time of the fork being unspent.

Source: BitMEX

In any case, the report advised interested investors not to invest in BCH due to further considerations such as a low quality P2P network, lost coins never entering the market, and “volatile and unusual difficulty adjustment system.”

Though this data may seem irrelevant due to the publication of more recent developments, it still provides a means of measuring growth in volume and velocity for BCH.

Three Months of Updated Data

Despite the conclusions in the September publication, BitMEX’s research team published a report on December 1, 2017 that indicated a greater level of competition between the two cryptocurrencies. As of November 29, 2017, “6.5 million and 6.3 million Bitcoin and Bitcoin Cash coins have been spent at least once since the fork, respectively.”

Source: BitMEX

The pace at which BCH is being spent, however, is nonetheless declining in general, undeterred by the infrequent spikes in value throughout its existence.

The forked digital currency is expressing mild to positive changes in transaction volume “averaging at 6.0 [percent] [between November 22 and December 1, 2017], compared to the overall total figure of 5.5 [percent].”

There has also been a remarkable increase in the number of BCH spent since its inception in August, with holders spending 38.5 percent of all coins at least once on this chain. Although, the research states that one limitation is that each spend does not necessarily translate to a divestment.

Source: BitMEX

The difference in BCH being spent since the first analysis of the coin led analysts to conclude that investment flow between the two cryptocurrencies massively increased. Not only that, but that the political divides between the two camps had already taken their effect on the coin’s respective value, and that value could be safely determined by “merit or utility” rather than how best to lead a community.