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The gains are also occuring in the context of an overall crypto market recovery following Bitcoin’s strong comeback from $30,000 support.
Ethereum Classic (ETC) hit a three-week high on Wednesday, boosted by a $50 million investment from the Barry Silbert-backed Digital Currency Group and an overall cryptocurrency market rebound driven by Bitcoin (BTC).
The 17th-largest cryptocurrency by market value went as high as $63.19, representing a roughly 98 percent increase from its low of $31.91 on June 22. Meanwhile, the total market value of Ethereum Classic coins in circulation has surpassed $7.53 billion.
$ETC was part of the 1%.
+65% since Barry told us he was buying. https://t.co/gIa8FAeUQM
— Hsaka (@HsakaTrades) June 30, 2021
Digital Currency Group (DCG) revealed on June 21 that it has authorized the purchase of up to a total of $50 million worth of shares of Grayscale Ethereum Classic Trust (OTCQX: ETCG). Grayscale is a New York-based investment firm that provides accredited investors access to digital currency products in the form of traditional securities.
On the day of the announcement, Ethereum Classic plummeted by 22.56 percent, much like the rest of the cryptocurrency market, which was reacting to China’s escalating crackdown on the regional crypto industry, including a total ban on mining-related operations.
Despite the massive sell-off, the Bitcoin and altcoin markets recovered in lockstep. Traders identified buying chances in the Bitcoin market when BTC/USD fell below $30,000 – a psychological support level that has recently prevented the pair’s downward bias from blossoming much more.
Meanwhile, altcoins merely tailed the Bitcoin rebound owing to their high correlation with the top digital asset.
According to data provided by Crypto Watch, the 30-day correlation efficiency between Bitcoin and Ethereum’s Ether (ETH) was 0.83 on Wednesday. A reading of 1 represents a perfect positive correlation between two assets.
Copycat hard fork
Gains in ETC were also seen in the days leading up to a significant Ethereum Classic network update in July.
In further detail, Ethereum Classic arose from a contentious blockchain split in the aftermath of a $150 million hack on the Ethereum-based DAO project in April 2016. The team lead by Vitalik Buterin suggested erasing the assault from the Ethereum network’s history with a ledger change that presented Ethereum as a controlled blockchain.
This resulted in the establishment of two Ethereum camps: one that supported the chain’s reversion and one that did not. Finally, the discrepancies resulted in the establishment of two competing yet distinct Ethereum chains, one of which is Ethereum Classic.
The structure of Ethereum Classic as a blockchain project differs from those of its rivals. Unlike Ethereum, Ethereum Classic is supported by a number of development teams, including IOHK, ETC Cooperative, ETC Labs, and others. In general, the majority of these teams have concentrated on scaling solutions.
Simultaneously, their goal remains improving development tools and supporting cross-chain transactions so that other projects may build on Ethereum Classic.
On June 10, Steven Lohja, the lead developer at Mantis IOHK, announced to upgrade the Ethereum Classic blockchain with a hard fork called Magneto. The major update, as Lohja confessed, would be inclusive of the Ethereum Berlin upgrade features introduced earlier this year.
The Ethereum Classic enhancement suggestions tend to increase the blockchain’s network security while lowering gas prices — this is accomplished by keeping addresses and keys in a single location for users to access with a single transaction.
The Ethereum Classic hard split will go live in July, coinciding with the Ethereum London upgrade around the same time.
ETC technical setup
The latest ETC/USD rebound has come closer to invalidating a classic bearish setup that prevailed earlier.
The ETC/USD exchange rate rebounded in the middle after breaking out of its previously dominant descending triangle pattern. The pair found support just above its 200-day simple moving average (200-day SMA; the orange wave in the chart above) and rose to close above the triangle support at $51.77.
Furthermore, the comeback shifted the 20-day exponential moving average (20-day EMA; the green wave) of ETC/USD from resistance to support. It currently looks to be doing the same thing, with the 50-day simple moving average (the blue wave) serving as resistance.
Adjusting the triangle’s support trendline lower, on the other hand, makes it look like a bullish falling wedge formation.
ETC/USD has broken bullish out of the pattern, which is consistent with its traditional description. With a strong follow-through, the pair may climb by as much as the maximum Wedge height — that is, the total maximum distance between its upper and lower trendlines. It comes to around $86.
This raises the profit objective for the ETC/USD wedge to about $130.
In the event of a reverse from the 50-day SMA, ETC/USD may attempt the 20-day EMA as intermediate support. Such a move would also jeopardise the collapsing wedge formation.