In the dynamic world of cryptocurrency, mainstream assets often experience rotational bullish trends. Recently, Litecoin (LTC) has demonstrated notable upward momentum, while Bitcoin Cash (BCH), following its latest hard fork, has shown limited price responsiveness.
On November 16 and 17, LTC surged from $61 to a peak of $75.7, marking a 24% increase and elevating its market capitalization above BCH to claim the sixth position. During the same period, BCH experienced a modest rebound from $235 to $250.5, representing a gain of only 6%. This performance occurred just after the Bitcoin Cash network underwent a hard fork on November 15, which led to a further split in its consensus mechanism.
The division stemmed from a proposal by the core development team, ABC, which suggested that miners contribute 8% of their income to a development fund. This idea faced strong opposition from the community, prompting the NODE development team to branch out and create an alternative version of the network.
However, internal challenges are not the only factors hindering BCH's progress. The rising dominance of stablecoins as the preferred medium of exchange in the crypto market has挤压ed BCH's utility as a specialized currency. Additionally, previous attempts to explore smart contract capabilities have been fraught with difficulties, including the dissolution of key development teams like Copernicus. Funding shortages have also plagued BCH developers, leading to controversial proposals such as the miner income contribution plan.
Meanwhile, LTC, often referred to as "digital silver" to Bitcoin's "digital gold," has closely mirrored Bitcoin's recent surge. In contrast, BCH's exchange rate against Bitcoin has hit an all-time low. Once hailed as the "crown prince" of cryptocurrencies, BCH has seen its value diluted through repeated forks.
With its "currency" pathway proving challenging and smart contract initiatives facing obstacles, what narrative can BCH adopt next? There are indications that a decentralized, non-custodial futures trading platform is currently being tested on the BCH network.
Market Performance: LTC Overtakes BCH
On November 17, Litecoin's market capitalization surpassed that of Bitcoin Cash, securing the sixth rank among cryptocurrencies. Data from Coingecko showed LTC's market cap at $4.85 billion, compared to BCH's $4.66 billion as of 1:00 PM UTC.
LTC's price rallied for two consecutive days, with gains exceeding 20% at its peak. On November 16, Litecoin founder Charlie Lee tweeted a cryptic message composed of emojis: a rooster, a dolphin, a bee, and cash, followed by the word "Soon." The community interpreted this as a prediction that LTC would soon flip BCH in market value—a prediction that materialized within hours.
During this period, LTC climbed from $61 to a high of $75.7, while BCH only managed a 6% increase. This divergence occurred just after BCH's latest hard fork.
Institutional interest has also favored LTC. Grayscale Investments, a prominent digital asset manager, reported that its Litecoin Trust held $53 million in assets under management, compared to $45.8 million for its Bitcoin Cash Trust.
Both LTC and BCH were created to address Bitcoin's scalability issues and initially pursued similar "electronic cash" use cases. However, neither has achieved widespread adoption beyond value storage and niche payment scenarios. Historically, LTC held the second-largest cryptocurrency position before the rise of Ethereum and BCH. While LTC has maintained its "digital silver" status, BCH earned the nickname "bitcoin's heir" but has struggled to retain that prestige.
As Bitcoin's rally continues, BCH has lagged behind other major assets. Since briefly surpassing $500 during last year's halving hype, BCH has mostly traded at lower levels. Year-to-date data reveals that BTC and ETH have gained 96% and 256%, respectively, while LTC and XRP rose 76% and 56%. In contrast, BCH only managed a 21% increase.
Challenges to the "Currency" Narrative
BCH's struggles stem partly from the difficulty of establishing itself as a widely used currency, both in everyday transactions and within the crypto ecosystem. Even Bitcoin, with broader consensus, has not achieved mass adoption for payments. Moreover, the smart contract space is dominated by Ethereum.
The vision of BCH as a mainstream currency appears increasingly distant. Since Facebook announced its Libra project, central banks worldwide have accelerated their own digital currency initiatives. China's digital yuan, for example, began pilot testing in October 2020, emphasizing the role of state backing in currency legitimacy.
Within the crypto market, stablecoins have become the preferred medium for value exchange. The stablecoin market has diversified significantly, with offerings like USDT, USDC, and the decentralized DAI gaining traction. Since the market downturn in March, the total market cap of stablecoins has grown nearly fourfold, from $6 billion to $23.4 billion—equivalent to five times BCH's current valuation.
On-chain data further highlights BCH's challenges. The number of addresses holding BCH has declined from 1.788 million in May to 1.58 million in November, a loss of 200,000 addresses. Similarly, LTC addresses dropped from 3.17 million to 2.61 million. This erosion of holder confidence may reflect dwindling belief in BCH's future.
Smart Contract Ambitions and Setbacks
Beyond its currency aspirations, BCH has attempted to integrate smart contract functionality. In 2018, the Copernicus team, supported by Bitmain, began developing a smart contract framework for BCH, including a token issuance protocol called "Wormhole." However, internal conflicts at Bitmain led to the team's dissolution, stalling BCH's progress toward becoming a programmable blockchain.
Funding shortages have persistently hampered development. The recent proposal to allocate 8% of mining rewards to development was intended to address this issue but instead triggered a community split. The NODE team's fork created an alternative version without the contested fund, further dividing consensus.
Not all community members supported the fork. Roger Ver, founder of Bitcoin.com and a prominent BCH supporter, noted that such contentious hard forks could deter institutional adoption, referencing PayPal's decision to include BCH in its crypto services.
The fork concluded on November 15, with the NODE version retaining the BCH ticker. As of November 17, the forked asset, BCHA, traded at $18.8, while BCH traded at $251—13.3 times higher. Despite retaining its name, BCH's standing has diminished. Its exchange rate against Bitcoin hit a yearly low of 0.0146, reflecting weakened confidence.
New Developments and Future Prospects
Despite these challenges, BCH continues to innovate. On November 16, developer Johnathan Silverblood announced that AnyHedge, a decentralized, non-custodial futures trading platform built on BCH, is nearing completion after two years of development. This project aims to introduce sophisticated financial instruments to the BCH ecosystem.
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However, BCH lags behind Ethereum, where decentralized applications are already ubiquitous. For speculative investors, this delay might not be entirely negative. Jiang Zhuo'er, founder of BTC.TOP and a BCH advocate, suggests that new investors entering the market during Bitcoin's rally may seek higher returns from smaller-cap assets like BCH and LTC, potentially driving significant price appreciation.
Frequently Asked Questions
What caused BCH's recent hard fork?
The hard fork resulted from a disagreement over a proposal to allocate 8% of miners' rewards to a development fund. While the core team argued this was necessary for sustainable funding, community opposition led to a split, with the NODE team creating an alternative version.
How does LTC's performance compare to BCH?
LTC has outperformed BCH in recent months, with a year-to-date gain of 76% compared to BCH's 21%. LTC's market capitalization also briefly overtook BCH's in November.
Can BCH compete with Ethereum in smart contracts?
Currently, BCH lacks the ecosystem and developer support that Ethereum enjoys. While projects like AnyHedge show promise, BCH is still in the early stages of smart contract deployment.
What is the outlook for BCH's price?
Some analysts believe that if Bitcoin's rally continues, investors may turn to undervalued assets like BCH for higher returns. However, ongoing network splits and adoption challenges remain headwinds.
How do stablecoins affect BCH's utility?
Stablecoins have become the preferred medium for trading and value transfer in crypto, reducing demand for BCH as a transactional currency.
Are there institutional products for BCH?
Yes, Grayscale offers a Bitcoin Cash Trust, though its assets under management are smaller than those of its Litecoin and Bitcoin trusts.
In summary, while BCH faces significant challenges, it continues to evolve. Its future will depend on its ability to foster development, maintain consensus, and find a compelling use case in a competitive landscape.