Why Is Ethereum Classic Rallying: Fluke or Trend?
Ethereum Classic price has been surging ever since the Agartha hard fork in mid-January. Starting at $5 before the hard fork, today the price has reached $12, seemingly continuing the upward trend. This led to an increased mining activity within the network, and the hash rate breaking all-time records with 20 TH.
What’s happening with Ethereum Classic? Is this truly a phoenix’s resurgence for this venerable altcoin? In this article, forklog.media will provide facts and suggest explanations.
Let’s start with a little bit of a backstory.
Remember Ethereum Classic?
Ethereum Classic (ETC) is a cryptocurrency that came into being as a result of Ethereum’s hard fork on July 20, 2016. In fact, Ethereum Classic is the original Ethereum branch that is maintained by the members of the early Ethereum community who refused to go through with a hard fork that compromised Ethereum blockchain’s immutability after the DAO kerfuffle.
Ethereum and Ethereum Classic are not that different code-wise. They share the same mining algorithm and smart contract infrastructure. Their main difference lies in levels of community support and their respective financial situations. Ethereum Classic does not enjoy the support of the Ethereum Foundation. Hence it is less technically developed, has a lower hash rate, and runs way fewer Dapps.
That being said, many principled crypto-anarchists and blockchain purists supported ETC exactly because it stayed true to the tenets of blockchain’s immutability. Which hardly seems surprising as the community’s motto is “Code is Law.”
Immediately after the notorious 2016 hard fork, the price of both resulting coins plummeted. For a few days in late July, ETC could be bought for just 60 cents. But once Ethereum Classic appeared on the popular Poloniex exchange, it’s price quickly climbed to $1 and beyond.
ETC price and market cap. Source: CoinMarketCap
In 2017, the ETC price started growing again, on the backdrop of numerous Ethereum’s issues (scalability problems, increasing mining difficulty, vulnerabilities in smart contracts, etc). ETC was also a popular coin among beginner miners because it required less initial investment. Another factor that supported Ethereum Classic’s capitalization was the formation of Ethereum Classic Investment Trust and the promotion by well-known industry celebrities like Barry Silbert.
The coin saw its peak during winter months of 2017–2018, when most other cryptocurrencies were at their highest, riding the hype wave. In February 2018, ETC was traded at $42. Then the market crashed and ETC spent most of 2019 flatlining between $4 and $8.
After that, the price suddenly peaked over $12. How come?
Hash Rate Is Up
Ethereum Classic’s hash rate has not been as high ever since the crypto Ice Age of 2018. After the painful stagnation of 2019, the year 2020 saw the mining activity on the network explode, almost doubling the hash rate in just a month.
Last week #EthereumClassic hashrate reached new all time highs of ~20Ths. At the same time, the number of subreddit subscribers rose aswell. This rally has seemingly captured investor interest.
— Ethereum Classic (@eth_classic) February 5, 2020
Hash rate the estimated number of hashing operations the network is performing in a given amount of time as new blocks are being mined. It is one of the most important indicators of network health and security. Although higher hash rate makes mining more expensive, it makes the network more resistant to 51% attacks which admittedly ETC has wrestled with in the past.
What’s Up With the Price?
Ethereum Classic’s hash rate hike has perfectly coincided with a steep increase in price and was likely triggered by it too. The coin’s price almost tripled since the beginning of the year, sitting today at $12. This windfall was probably triggered by a combination of factors.
It is clearly not a coincidence that the ETC price started climbing only a few days after Ethereum Classic Agartha hard fork went live. Agartha included a bunch of updates that increased interoperability with the Ethereum blockchain and even included Ethereum’s Constantinople and St. Petersburg upgrades.
Two weeks ago, ETC Cooperative’s CEO Bob Summerwill announced that the team managed to secure Grayscale Investments’ financial support for Ethereum Classic for two more years.
“It is a big vote of confidence which we deeply appreciate. This funding allows us to continue our support of the ETC protocol and ecosystem,” he noted.
During the recent AMA, Bob Summerwill stated that he expects ETC to attract much more DeFi (decentralized finances) products to its blockchain this year.
“ETC is Ethereum too and with complete compatibility, DeFi projects could target ETC as well very easily. I expect to be talking to many, many DeFi projects in the coming months, giving them the elevator pitch.”
It should also be noted that Ethereum Classic was quite recently added to Binance’s futures markets.
Another unexpected news came from Vitalik Buterin himself, who publicly mentioned that he, in fact, believes that the two chains can yet be reunited within Ethereum 2.0.
“Technically very possible! You can just use the same merger process to import the ETC state that is planned for ETH, and then the ETC execution environment code would enforce a different exchange rate vs beacon chain eth, based on the rate at the time of the merger (or some other pre-agreed formula). This is if you want to re-merge the currencies. Whether or not the communities want it is, of course, another question.”
Last but not least, investors are looking forward to future events announced by the developers. More specifically, the so-called Phoenix day.
The Ethereum Classic network is expected to reach full byte-code compatibility with Ethereum after the next hard fork which is scheduled for March 25, 2020. The upcoming Aztlan hard fork will be launched simultaneously with the twin Phoenix hard fork, which is supposed to introduce the full compatibility of sibling blockchains.
This day has already been aptly dubbed the “Phoenix day.”
ETC Phoenix Hardfork:https://t.co/Nw0AgFrqnW
"As long as we can gather adequate human consensus we remain on track to deliver full byte-code compatibility with the ETH mainnet on 25th March 2020, at block 10,500,839, which I am suggesting we call Phoenix Day."#ethereumclassic pic.twitter.com/fcbNQXBbVk
— ETC Cooperative (@ETCCooperative) January 27, 2020
Overall, it looks like Ethereum Classic will have its lucky streak in 2020.
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