Yes, Merge is bullish for Ethereum Classic price, but do you know when to get out?

• What are the ramifications of the Merge on Ethereum Classic price?
• ETC saw a shallow dip on August 2, but the recovery has been quicker.
• A resumption of the rally to $77.33 seems plausible before Merge, especially with appropriate momentum backing the move.
• A weekly candlestick close below $25.11 will invalidate the bullish thesis.

Ethereum Classic price is trading extremely volatile and bullish at the moment due to the upcoming Ethereum upgrade - Merge. 

In this article, we will take a closer look at the ramifications of Merge and the effects of its proposed migration from Proof-of-Work (PoW) to Proof-of-Stake (PoS).

Ethereum vs Ethereum Classic 

First, a quick recap on the difference between Ethereum and Ethereum Classic. A hard fork back in 2016 led to the splitting of ETH into two distinct assets: Ethereum (ETH) and Ethereum Classic (ETC). The main difference between the two is that ETC is a speculative digital asset with a fixed supply of 210,700,000. Whereas ETH is the more popular and accepted version that is widely traded, with no fixed supply.

Another difference is that whilst ETH is planning a much-publicized shift to PoS from PoW, in the Merge, ETC intends to keep traditional mining on its own blockchain after Ethereum migrates to PoS.

ETC price: before and after the urge to Merge

So what can investors expect will happen to the Ethereum Classic price a few days before and after the big event that is the Merge?

Right now, the value is split between Ethereum main chain and Ethereum Classic, with traders looking to squeeze as much of the profits they can using the ETH PoW futures products listed on BitMEX and Poloniex. 

Before the Merge implementation, the ETH chain will split into two chains - ETH1 (PoW) and ETH2 (PoS). So let’s look at potential scenarios that could affect ETC holders.

1. After the Merge, investors will likely offload their ETH1 holdings and buy ETH2 since they believe that the PoS will accrue a larger value despite the fork.
2. ETC holders could also do the same and move to ETH2 or, in a limited number of cases, ETH1.
3. Miners, on the other hand, will be skewed to mining the most profitable chain. Due to the ongoing fight between Ethereum Foundation and mines, the miners will likely support ETH1. However, if the ETC price is high enough and mining is profitable, they could stick around with ETC.

Regardless of how you look at it, the Ethereum Classic price will likely take a massive hit. This is borne out by data from Grayscale, which offers ETC products, and has been offloading its holdings since March 2021.

Grayscale has reduced its ETC exposure from roughly $12.45 million to $11.96 million, denoting a delta of 500,000.

Grayscale ETC holdings

Ethereum Classic Price Technicals

How does ETC look from a technical perspective, what do the charts say about it all? Ethereum Classic price has breached its falling wedge pattern and shows strong bullish momentum. The retracement between July 30 and August 2 only pushed it to $33.62, which is the midpoint of the 265% upswing witnessed between June 13 and July 25. 

A further spike in bullish momentum could see ETC revisit and flip the range high at $52.72 after a 35% ascent. If this outlook persists, and it most likely will, the Ethereum Classic price could reach the double top formation at $77.33.

This move would constitute a 97% ascent from the current position and is likely where ETC could form a local top, at least after collecting the liquidity. 

ETC/USDT 1-day chart

In conclusion, investors need to be prepared to experience massive spikes in volatility and potential drops in Ethereum Classic price a day or two before the Merge, which is scheduled to occur on September 19.

One consideration that investors need to make is if their ETC investment is for short-term speculation or long-term. If it’s the latter, then post-Merge, the Ethereum Classic chain will likely accrue value, especially if the ETH1 chain fails to take off.

In such a case, ETC has a bullish future, but it is too far into the future with too many variables to predict a probabilistic outcome, let alone a certain one.

 

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