Does Bitcoin Cash Have a Mind of its Own, or Will Bitcoin Always Determine its Future?

Abstract

Bitcoin Cash is a cryptocurrency which was spun-off from Bitcoin in 2017. It was a result of a disagreement over Bitcoin’s 1mg block size which it was felt hindered transaction times. The Bitcoin Cash block size was initially set at 8mg allowing more transactions to be verified at a time, resulting in faster transaction times and was increased to 32mg in May 2018. Evidence points to a high correlation between Bitcoin and Bitcoin Cash prices but this only provides limited support for determining the direction of Bitcoin Cash price changes, not for the size of the price change. To enhance the understanding of the influence that Bitcoin has over Bitcoin Cash a multiplier is calculated which provides a picture of the difference between Bitcoin and Bitcoin Cash prices. The use of a multiplier provides an alternative point of view. The price of the two coins has moved further and further apart from an initial situation in July 2017, with Bitcoin 6.6 times the Bitcoin Cash price, to March 2021 where the Bitcoin price is now over 100 times the price of Bitcoin Cash. Just viewing them as highly correlated, indicating Bitcoin’s influence over the direction Bitcoin Cash price movements isn’t the whole story. Bitcoin Cash isn’t attached by a tether to Bitcoin but rather an elastic band. How far this will stretch before breaking, leaving Bitcoin Cash to find its own future, remains to be seen.