Bitcoin Cash (BCH): Investment flow data (update)

Abstract: In early September 2017, we published a piece on Bitcoin Cash  (also known as BCash) and how one can analyse transaction data on the two blockchains involved in the split, to try to draw conclusions about the potential investment flows between the two chains.  In this piece we update the analysis, with another three months worth of data.

 

Total coins spent

Bitcoin had an initial lead with respect to total coins spent at least once since the fork, when compared with Bitcoin Cash.  However, Bitcoin Cash caught up in early September.  Since then both coins have been approximately neck and neck.  As at 29th November 2017, 6.5 million and 6.3 million Bitcoin and Bitcoin Cash coins have been spent at least once since the fork, respectively.

 

Figure 1 – Bitcoin Cash (BCH) vs Bitcoin (BTC) – Number of coins spent at least once since the chain split

Source: BitMEX research, Bitcoin blockchain, Bitcoin Cash blockchain, Bittrex (Price data)

 

Daily Bitcoin Cash Spend for the first time

Although there have been several spikes, normally after a rally in the Bitcoin Cash price, the number of Bitcoin Cash coins spent each day (for the first time since the fork) continues its decline.  In the last five days, the average daily first time spend has been just c19,000 per day, compared to lows of around 50,000 in August.

 

Figure 2 – Bitcoin Cash coins spent for the first time since the split (daily)

Source: BitMEX research, Bitcoin Cash blockchain, Bittrex (Price data)

 

Transaction Volume

With respect to transaction volume, a more normal metric compared to our somewhat convoluted first time spend since the fork metric, there is not much change in the relative transaction volumes of the two chains.  The total cumulative Bitcoin Cash transaction volume is 5.5% of Bitcoin, since the fork.  Although this figure is increasing slightly, averaging at 6.0% in the last 10 days, compared to the overall total figure of 5.5%.

 

Figure 3 – Daily transaction volume (Number of transactions)

Source: BitMEX research, Bitcoin blockchain, Bitcoin Cash blockchain, Bittrex (Price data)

 

Proportion of Bitcoin Cash coins spent

In the first four months of Bitcoin Cash, 38.5% of all coins that existed at the time of the fork, have been spent at least once on the Bitcoin Cash chain.  In our view, this is a remarkably high figure, considering many millions of coins are lightly to have been lost forever years ago.

 

Figure 4 – Bitcoin Cash (BCH) – Proportion of spent vs unspent coins since the chain split

Source: BitMEX research, Bitcoin Cash blockchain

 

Conclusion

In our view, the above data shows that after just four months, there may have been considerable investment flows between the two coins.  Therefore, many supporters of each coin may have already made their respective investment/divestment decisions, and 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.

We would like to remind readers that there are many weaknesses with resepect to this analysis, the main one being that a spend on the Bitcoin Cash chain does not necessarily relate to a divestment.