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Ethereum Classic Price Analysis – Business as usual despite 51% attack

Technicals for both ETC/USD and ETC/BTC suggest a potential end to the multi-month bear trend on both pairs. ETC/USD rose 144% from the December 2018 lows, in spite of a 51% attack.

Ethereum Classic (ETC) is a distributed ledger and decentralized computing platform with smart contract capabilities, created in 2016 using the original Ethereum (ETH) code base. The crypto asset is currently 18th on the BraveNewCoin market cap table, at US$689.66 million, with US$207.34 million in trade volume over the past 24 hours. The ETC spot price is down 87% from the all-time high set in mid-January 2018.

A quick comparison between Ethereum and Ethereum Classic shows Ethereum dominating by every metric, including; market cap, transactions per day, daily active addresses, hashrate, and GitHub commits on the main repo over the past year.

Ethereum Classic Price Analysis17 April 2019 (1)

ETC was created by a contentious hard fork, following the Decentralized Autonomous Organization (DAO) hack in June 2016, which lead to ~US$50 million being drained from the DAO through recursive call attacks. The DAO was originally established as a venture capital fund built on Ethereum, and launched with a crowd sale in April 2016. As of May 2016, the fund held ~14% of the Ethereum total supply, roughly ~US$150 million, from 11,000 investors.

To recoup the lost funds, a hard fork of the original Ethereum chain quickly followed the hack. The original chain survived, in large part due to exchange listings, and was renamed Ethereum Classic. ETC proponents questioned the immutability of the ETH ledger after the hard fork solution was implemented. Additionally, the ETC developers and community agreed to cap issuance and decrease the block reward. Annual inflation on the network currently stands at 8.05% compared to ETH’s 4.73%

Barry Silbert, founder and CEO of Digital Currency Group (DCG), was one of the most prominent members of the community embracing ETC and encouraging future development, through Hong Kong-based IOHK. A subsidiary of DCG, Grayscale, is a trust comprised of several funds which issue shares backed by crypto. The trust issues shares for an ETC product which currently has US$29.7 million assets under management, representing 4,810,378 ETC, or 4.38% of the circulating supply.

Ethereum Classic Price Analysis17 April 2019 (2)

The number of ETC on-chain transactions per day (line, chart below) has continued to trend downward since mid-January and is currently pushing multi-month lows at 35,000. Transactions per day hit an all-time high in March 2018 after breaching the 70,000 mark.

The average transaction value per day (fill, chart below) has increased dramatically since February and is currently at a multi-month high of US$400. Average transaction value hit an all-time high in mid-January 2018 at nearly US$6,000, also corresponding with an all-time high in ETC token price.

Ethereum Classic Price Analysis17 April 2019 (3)

The 30-day Kalichkin network value to estimated on-chain daily transactions (NVT) ratio (line, chart below) has increased dramatically since February, and has been establishing a new all-time high almost daily. A clear uptrend in NVT suggests a coin is overvalued based on its economic activity and utility, which should be seen as a bearish price indicator, whereas a downtrend in NVT suggests the opposite. A strongly uptrending NVT with a new uptrend in price suggests the asset is currently overbought or that the NVT metric may need to be retooled to better understand market variables.

Daily active addresses (DAA) have decreased from the September 2018 high of over 22,000, to the current 21-month low of nearly 14,500 (fill, chart below). A sustained decline in DAA suggests waning general interest in an asset. An uptick or upward reversal in the DAA downtrend should be seen as a bullish indicator fas this indicates sustained blockchain use.

Ethereum Classic Price Analysis17 April 2019 (4)

Mining activity over the past few years has increased substantially thanks to ASICs developed by Innosilicon, Bitmain, and PandMiner for the Ethash consensus algorithm. Hash rate peaked in September 2018 and is currently sitting within the previous multi-year range set from October 2017 to July 2018. As opposed to ETH, ETC is unlikely to ever implement Proof of Stake (PoS) and will likely remain a Proof of Work (PoW) chain for the indefinite future. As ETH mining becomes more and more unprofitable with successive changes to the ETH block reward, miners will likely point their Ethash ASICs towards the ETC chain.

Ethereum Classic Price Analysis17 April 2019 (5)

In early January this year, ETC suffered a 51% attack via “deep chain reorganization.” Mark Nesbitt, a security engineer at Coinbase, alerted the community of the attack with a blog post explaining the matter. Coinbase disabled ETC transfers at that time, re-enabling them on March 11th and now requiring 5676 confirmations for ETC deposits, or about 24 hours.

The attack resulted in double-spends for 219,500 ETC, or US$1.1 million at that time, according to the blog post. Hashrate has only recently begun to recover from the incident. Shortly after the attack, a site to monitor the status of potential 51% attacks was released by ETC Labs.

Exchanges are typically the most vulnerable and biggest targets during a 51% attack. reported the theft of 40,000 ETC, or US$200,000 at that time. A few days later, US$100,000 in ETC was returned to the exchange with no explanation. Bittrue also announced there was an attempt to withdraw 13,000 ETC during the 51% attack, but the withdraw was stopped by exchange-side countermeasures.

Ethereum Classic Price Analysis17 April 2019 (6)

Turning to developer activity, the ETC project has 59 repos on GitHub. Overall, the most active repos have had relatively few commits over the past year (shown below). The Ethereum Classic Improvement Protocol (ECIP) repo has been the most active over the past few months.

Most coins use this development platform, where files are saved in folders called "repositories," or "repos," and changes to these files are recorded with "commits," which save a record of what changes were made, when, and by who. Although commits represent quantity and not necessarily quality, a higher number of commits can signify higher dev activity and interest.

On January 8th, after the 51% attack, ECIP-1049 was introduced by Alexander Tsankov to change the ETC PoW algorithm from Ethash to Keccak256. Tsankov believes that this algorithm would be less vulnerable to 51% attacks. Keccak256 is also used in Solidity for ETH smart contracts. Discussions regarding the possible change are currently ongoing, including implementing ProgPoW, which is likely to be released on the Ethereum chain later this year.

Earlier this week, the ETC Labs dev team released plans to implement ECIP-1054, Atlantis, which will enable the Spurious Dragon and Byzantium network protocol upgrades currently active on the Ethereum network. The Atlantis main-net implementation is slated for September 2019. The _Constantinople _protocol changes will be included in the ECIP-1056, Agharta, with no date currently set for release. Both ECIPs will occur via hard fork and aim to increase ETC and ETH compatibility.

Ethereum Classic Price Analysis17 April 2019 (7)

Ethereum Classic Price Analysis17 April 2019 (8)

Ethereum Classic Price Analysis17 April 2019 (9)

In the markets, ETC exchange traded volume over the past 24 hours has predominantly been led by the Tether (USDT), Bitcoin (BTC), and Ethereum (ETH) pairs. The Korean Won (KRW) pair currently holds a 1.8% premium over the USD pair.

Although many exchanges paused ETC deposits and withdrawals in January, during the 51% attack, all exchanges have since resumed trading as normal. Earlier this month, Poloniex enabled ETC/BTC margin trading up to 2.5x leverage for non-U.S. customers.

Ethereum Classic Price Analysis17 April 2019 (10)

Technical Analysis

The 51% attack in early January had almost no impact on ETC price, which has essentially mirrored the broader crypto market since November 2018. Potential roadmaps for upcoming price movements can be found on high timeframes using exponential moving averages (EMAs), volume (VPVR), Pitchforks (PFs), Chart Patterns, and Ichimoku Cloud. Further background information on the technical analysis discussed below can be found here.

On the daily chart, the 50-day and 200-day EMAs have been bearishly crossed since March 2018. This key EMA cross is likely to cross bullishly in the next few weeks, with the market confirming the 200 EMA as resistance several times over the past few days. The most prudent long entries will occur after a 50/200 EMA cross and after the 200 EMA is confirmed as support. There are currently no active RSI or volume divergences.

The long/short open interest on Bitfinex (top panel, chart below) since April 2018 has been heavily net long, with long positions currently accounting for 81% of open interest. A significant price movement downwards will result in an exaggerated move further, as the long positions will begin to unwind. This is known as a “long squeeze.” Likely support for any bearish moves will occur between the US$4.00- US$5.00 range based on VPVR (horizontal bars).

Ethereum Classic Price Analysis17 April 2019 (11)

ETC also remains bound to a potential multi-year bearish PF with anchor points in May and September 2017 and May 2018. Price broke down from a falling wedge in November 2018, breaching the median line (yellow) with significant bearish momentum. Price recently returned to the median line, as is commonly the case throughout the lifespan of any given trend. Based on this PF, the macro trend will remain bearish until price exceeds US$13. The US$10 level represents significant psychological resistance.

Ethereum Classic Price Analysis17 April 2019 (12)

Turning to the Ichimoku Cloud, four metrics are used to indicate if a trend exists; the current price in relation to the Cloud, the color of the Cloud (red for bearish, green for bullish), the Tenkan (T) and Kijun (K) cross, and the Lagging Span. The best entry always occurs when most of the signals flip from bearish to bullish, or vice versa.

Cloud metrics on the daily time frame, with doubled settings (20/60/120/30) for more accurate signals, are bullish for the first time since January 2018; price is above the Cloud, the Cloud is bullish, the TK cross is bullish, and the Lagging Span is in Cloud and above price. This was also the first bullish Kumo twist since March 2018. Price currently sits just above the Kijun, or mean reversion point. Price will often test this zone before trend continuation.

Ethereum Classic Price Analysis17 April 2019 (13)

Lastly, on the daily ETC/BTC chart, trend indicators also suggest an end to the multi-month bear trend. The 50/200 EMA cross is currently bearish but will likely cross bullish over the next few weeks. There is significant volume support between the 10,000-12,000 sat zone, suggesting price will not breach this level. Upside targets, also based on volume, sit at the 21,000-25,000 sat zone. Open interest on Bitfinex is currently 66% short (not shown). There are currently no active RSI or volume divergences.

Ethereum Classic Price Analysis17 April 2019 (14)


ETC fundamentals show declining user activity over the past few months, painting a bearish picture for the asset. Development is currently several months behind Ethereum, but some Ethereum protocol improvements are set to be implemented on the ETC chain later this year. Also in stark contrast to ETH, ETC’s value-add is a hard cap on total coins and no plans to change from PoW to PoS. ETC was also hit with a 51% attack this year, which is largely an exchange-level issue as these institutions hold vast quantities of most coins. However, there is a pending proposal to change the consensus algorithm in an attempt to increase ASIC resistance.

Technicals for both ETC/USD and ETC/BTC suggest a potential end to the multi-month bear trend on both pairs. ETC/USD rose 144% from the December 2018 lows, in spite of the 51% attack. Trend indicators, including the daily Cloud and high timeframe moving averages show the high likelihood of a definitive trend reversal in the next few weeks. The ETC/BTC pair is less bullish than the ETC/USD pair, but price currently sits above a heavy support zone. Although one 51% attack seemed to have virtually no effect on price, multiple 51% attacks will likely result in exchange delistings which would be extremely bearish for price.


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