While ETC has pulled lower from all-time highs, it is still up by more than 900%, outperforming Bitcoin and Ethereum
May was one of the most volatile months for the original Ether, Ethereum Classic (ETC). The altcoin quadrupled in value as investors shunned Bitcoin in favour of other cryptocurrencies. The 2,000% plus rally to all-time highs of $178 affirmed renewed interest, as investors look to diversify their holdings from the more popular coins.
Ethereum Classic Woes
Traders taking an interest in ETC and pushing it to all-time highs came as a surprise. Ethereum Classic has encountered many challenges over the past few years, explaining why it has underperformed as compared to Bitcoin’s (BTC) and Ethereum (ETH). Its ecosystem is not as active as it ought to be, even after powering the much raved about smart contracts and being the original Ether.
A decline in the number of unique addresses on ETC between 2018 and 2020 explains why it lags behind other high-profile cryptocurrencies. While the daily active user on Ethereum Classic blockchain stands at about tens of thousands, Ethereum ETH’s daily active users range from hundreds of thousands, nearing a million.
A series of attacks that have targeted the Ethereum Classic blockchain has also had a hand in the dwindling support for ETC among developers and investors. The blockchain has endured several 51% attacks since 2020, all but raising concerns over how secure the network is. Attackers have also succeeded in double spending significant amounts of ETC.
Ethereum Classic bounce back
Amid the disappointing developments, Ethereum Classic has continued to hold firm amid a ferocious sell-off in the broader cryptocurrencies sector. While it has also pulled down significantly from all-time highs, it is still up on a year-to-year basis.
Ethereum Classic’s price is being driven high by several factors, key among them being the momentum on its sister pair Ethereum. ETH was also on a fine run in May, rallying to record highs of $4,300, a momentum that appears to have trickled down to ETC.
Ethereum Classic exploded to record highs on growing optimism to have more relevance post the ETH 2.0 upgrade. Ethereum upgrading to the Proof of Stake (PoS) consensus mechanism is one factor that is working in favour of Ethereum Classic and strengthening its prospects.
Ethereum upgrading to PoS would essentially leave Ethereum Classic operating independently as a Proof of Work (PoW) Ether. ETC operating as the only alternative to the PoS mechanism would be a big differentiator that could work in its favour, especially among people who love the Ethereum blockchain but don’t cherish the PoS mechanism.
Ether Classic price gains in recent weeks can also be attributed to the fact that it holds some sentimental value of sorts. While it lacks the technological advancement of its sister Ether, it stands out partly because it is the original Ethereum maintaining the unchanged Ethereum blockchain. It stands out as a piece of history that should continue to shape the cryptocurrency industry.
Ethereum Classic Price Analysis
Ethereum classic started the year at about $5 a coin. It has since touched record highs of $178 before retreating to about $63 a coin. Amid the 60% pullback from all-time highs, it is still up by more than 900% for the year outperforming both Bitcoin and Ethereum, which remain the centre of attention in the cryptocurrency market.
After a deep pull back from the $178 level, Ethereum Classic has resorted to trading in a range, oscillating between the $61 mark and the $72 level. While $72 is the short-term resistance level curtailing further upside action, the $80 mark is a crucial resistance level. A rally followed by a close above the $80 mark should pave the way for ETC/USD to make a run for the $100 mark.
On the downside, the $60 mark is an important level, below which ETC/USD would be susceptible to further downside action. A breach of the support level could result in bears pushing the pair lower, probably to the $48 level, the next substantial support level.
Ethereum Classic needs to hold above the $60 level to have any chance of bouncing back to the $100 market and back to its all-time highs. A breach of the $48 level on volume could signal a continuation of the downtrend that could see it register further lower lows.
Ethereum Classic Price Forecast for June 2021
Ethereum Classic has what it takes to power through the $80 after recent consolidation above the $50 mark. An influx of investments into the burgeoning cryptocurrency sector, after a recent steep pullback, is one of the catalysts that should fuel a spike in prices. While the focus for the longest time has been on more popular altcoins of the likes of Bitcoin, Ethereum, and Litecoin, the focus is increasingly shifting to other altcoins with fair valuations.
Ethereum classic daily price chart. Source: Tradingview.com
In recent weeks, Bitcoin has come under immense pressure amid valuation concerns on powering to record highs of about $64,000. The flagship crypto has pulled lower significantly and looks increasingly bearish amid soaring short-selling pressure.
Amid the sell-off in the flagship cryptocurrency, Ethereum Classic has continued to attract bids as investors look for other altcoins away from Bitcoin. ETC has emerged as a cryptocurrency that could provide compelling upside potential given its fair valuation below the $100 mark.
Ethereum Classic 45 day price chart. Source: Tradingview.com
While the ETC/USD appears to have consolidated within the $60 to $70 level, it looks increasingly bullish given the bullish flag. The recent bounce back above the $50 level affirms bulls are still in control and could continue pushing it higher in June.
Other Events that Might Move the Price in June
ETC/USD prospects are looking increasingly bullish given that it is powered by a blockchain network expected to shape the future world of smart contracts. While Ethereum is the more popular Ether, ETC does not lag far behind, given that it does serve the same objective as ETH.
Ethereum Classic is on course to becoming the only smart programmable blockchain with a fixed supply of proof of work. The fact that the total number of coins is capped at 210 million explains why it could be more valuable as more coins are mined.
The limited supply that has worked in fuelling Bitcoin price appreciation should favour ETC going forward. Currently, there are about 116 million ETC coins in circulation. As supply diminishes, amid strong market demand, ETC value could increase significantly.
Additionally, the Ethereum Classic Labs is allowing ETC owners to gain access to the fast-growing Decentralized Finance. The introduction of ‘Wrapped ETC’ means ETC owners can stake their tokens. By not trading the coins, the result could be a significant increase in value given the limited supply in the market amid strong demand.
Ethereum Classic being the continuation of the original blockchain means it is free from interference and subjective tampering. Ethereum transitioning to proof of stake means Ethereum Classic will become the only smart programmable blockchain with a fixed supply. Additionally, as more people leverage its blockchain to power smart-contracts, its reputation should increase significantly, resulting in significant ETC price appreciation.
Please note, the above is a purely opinion-based piece, based on relevant data available. It should not be deemed as direct investment advice.
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