Bitcoin forks BCH, BSC and XEC have surged over the past month, but are the gains organic and sustainable?

In early June, the cryptocurrency market as a whole saw negative price action after the U.S. Securities and Exchange Commission filed new lawsuits against the world’s largest exchanges, Binance and Coinbase.

However, sentiment quickly turned optimistic after a pivotal exchange-traded fund proposal was submitted on June 16 by the world’s largest wealth management firm, BlackRock. BlackRock’s ETF replenishment was followed by a wave of ETF replenishments and institutional trading interest in digital assets.

The June 20 launch of EDX Markets, backed by Wall Street giants Fidelity Investments, Citadel Securities and Charles Schwab, fueled a specific sector of the market for Bitcoin forks like Bitcoin Cash (BCH) and Bitcoin SV (BSV) and other proofs -of- Work (PoW) cryptocurrencies like Kaspa (KAS).

The exchange started with Bitcoin (BTC), Ethereum (ETH), Litecoin (LTC) and BCH. The inclusion of BCH sparked an uptrend in other Bitcoin forks.

June’s top gainers included three bitcoin forks, followed by Kaspa and FLEX Coin (FLEX). FLEX benefited from integration with Open Exchange, backed by co-founders of bankrupt digital fund Three Arrows Capital.

The five best performing coins in June. Source: CoinGecko

In comparison, Bitcoin’s monthly gains came in at 11.94% as it traded above $30,000 for the first time since April 2023.

CoinFlex (FLEX) gets short-term boost from association with co-founders of 3AC

CoinFlex announced its transition to the Open Exchange (OPNX) bankruptcy exchange in May 2023. The price of the token hit a 13-month high of $4.37 on June 27.

Open Exchange is backed by the co-founders of now-bankrupt venture fund Three Arrows Capital. The co-founders are reportedly facing $1.3 billion in liability for their actions, which exacerbated the fund’s losses.

Still, the duo continued to back Open Exchange under a new venture fund under the same brand as their previous fund.

CoinFLEX received approval from the Seychelles courts for a restructuring of its exchange on March 6. Integration with Open Exchange gives FLEX a utility in OPNX to settle claims and earn staking rewards.

Notably, as FLEX prices soared to 2022 highs, trading volumes remained subdued at about 0.01% of the $1 billion daily trading volume compared to now, which is a red flag.

It is a case of significant volatility of illiquid assets. Due to their limited liquidity, these coins can be easier to increase in price compared to larger, more liquid assets.

Technically, the 2022 breakout levels around $5.08 and the all-time high of $7.56 will serve as resistance levels on the upside. The token faces an 80% downside risk towards $0.75, which is the May 2023 accumulation level.

Daily FLEX/USD price action. Source: CoinGecko

Bitcoin Cash (BCH) is benefiting from the uptrend in EDX markets

BCH price more than doubled in June after listing on the EDX exchange. BCH was one of the four cryptocurrencies launched on the platform, along with BTC, ETH, and LTC.

While the EDX listing acted as a positive catalyst, negative funding in the perpetual swap markets and possible market manipulation on the South Korean exchange Upbit are also the main drivers of the recent uptrend.

Funding Rate for BCH Perpetual Swaps. Source: Coinglass

According to an update from crypto analytics provider The Tie, the token’s price was liquidated by a total of $21 million in June. Values ​​are significantly higher than usual, where “daily liquidations total tens of thousands of dollars, if any.”

The total fees paid for the Bitcoin Cash blockchain are less than $200 year-to-date, suggesting that the use of the blockchain has been limited.

In comparison, Litecoin, which offers a similar utility, generates around 10 times more fee income for miners than BCH. Poor fundamentals and high liquidation rates cast doubt on the sustainability of recent gains.

The total fees paid on the Bitcoin Cash blockchain. Source: CoinMetrics

BSV is riding the BCH wave despite poor fundamentals

BCH and BSV show a strong correlation of 0.78, which appears to be the reason why BSV posted a 31.4% gain in June.

BSV has been in a steady downtrend since 2022 as interest in blockchain waned after the crypto bull market and its trading volume dried up.

The token touched an all-time low of $21.43 on June 10 before catching the BCH bullish move and starting an uptrend.

Its poor performance pushed miners out of its ecosystem, making a 51 percent attack on Bitcoin SV comparatively cheaper – an hour-long attack costing less than $2,000 compared to $1.4 million for Bitcoin, which is the Blockchain makes vulnerable.

Daily BSV price action. Source: CoinGecko

Related: “Bitcoin Jesus” Says Ethereum Leads Global Crypto Adoption

Kaspa (KAS) benefits from improved performance and low liquidity

Kaspa is a PoW consensus blockchain network, similar to Bitcoin and Litecoin.

Kaspa offers a high throughput of one block per second compared to Bitcoin’s 10 minutes. Kaspa Labs, the team building the blockchain, has also hinted at the launch of a public testnet that will boost its scalability by 10,000x, which appears to be fueling market sentiment.

However, according to CoinGecko, the token is primarily traded on unregulated exchanges with low trading volume and low trust scores. This makes the cryptocurrency vulnerable to high volatility and manipulation.

Technically, if the bullish momentum continues, KAS will attempt to retest the 2023 highs around $0.40. On the downside, the token is at risk of a correction towards yearly lows of around $0.15.

While the token is showing signs of market illiquidity, making it prone to volatility and facing stiff competition from major PoW networks like Bitcoin and Litecoin, its year-long price history has been positive with higher highs and higher lows.

KAS daily price chart. Source: CoinGecko

eCash (XEC) joins BSV and BCH in Bitcoin fork rally

eCash is a rebranded version of a tertiary Bitcoin fork, Bitcoin Cash ABC, which was another fork of Bitcoin Cash alongside Bitcoin SV.

Similar to BCH and BSV, XEC also benefited from the positive tide that boosted all boats joining the fork category.

Similar to Bitcoin SV, eCash lacks fundamental value and exhibits volatility due to illiquid market conditions. The token is listed on some top exchanges like Binance and Bithumb, but is not backed by any US exchange yet, raising a yellow flag.

The rise of tokens with low liquidity and loose narratives suggests that these tokens may experience price manipulation affecting their short-term price. The long-term value proposition of bitcoin forks remains questionable due to low utility and security.

Additionally, the cryptocurrency market is still suffering the negative impact of the SEC case. Tokens classified as securities such as Cardano (ADA), Polygon (MATIC) and Flow (FLOW) all saw losses of more than 20% over the month.

As markets grapple with legal challenges, constructing optimistic narratives has been difficult. Given that Bitcoin is leading the market, its price action will be crucial in determining the altcoin’s direction.

This article does not contain any investment advice or recommendations. Every investment and trading activity involves risk and readers should do their own research in making their decision.

This article is provided for general informational purposes and is not intended and should not be construed as legal or investment advice. The views, thoughts, and opinions expressed herein are solely those of the author and do not necessarily reflect the views and opinions of Cointelegraph.

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